Weather-induced mood, institutional investors, and stock returns

William N. Goetzmann, Dasol Kim, Alok Kumar, Qin Wang

Research output: Contribution to journalArticlepeer-review

91 Scopus citations


This study shows that weather-based indicators of mood impact perceptions of mispricing and trading decisions of institutional investors. Using survey and disaggregated trade data, we show that relatively cloudier days increase perceived overpricing in individual stocks and the Dow Jones Industrial Index and increase selling propensities of institutions. We introduce stock-level measures of investor mood; investor optimism positively impacts stock returns among stocks with higher arbitrage costs, and stocks experiencing similar investor mood exhibit return comovement. These findings complement existing studies on how weather impacts stock index returns and identify another channel through which it can manifest.

Original languageEnglish (US)
Pages (from-to)73-111
Number of pages39
JournalReview of Financial Studies
Issue number1
StatePublished - Jan 1 2015

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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