“Chemical Reaction” Between Extreme Weather and Stock Market

Research Article
Open access

“Chemical Reaction” Between Extreme Weather and Stock Market

Shixiahong Chen 1*
  • 1 Zhejiang University Of Finance & Economics    
  • *corresponding author 970133421@qq.com
Published on 10 November 2023 | https://doi.org/10.54254/2754-1169/27/20231243
AEMPS Vol.27
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-83558-075-2
ISBN (Online): 978-1-83558-076-9

Abstract

Weather plays quite an important role in our daily life, so what interests us most is whether there is a certain relationship between extreme weather and the stock market. This paper takes the meteorological data of Shanghai Hongqiao from 2019 to 2021 and the trading volume of the Shanghai Stock Index within the same time as the research object and uses STATA data analysis software and sample linear regression analysis methods to study the weather factors’ mechanism of action on the stock market trading. Through the verification of regression analysis and the application of behavioral finance theory, we find that although extreme weather is extremely destructive to production and life, it does not have the expected negative effect on the stock market.

Keywords:

weather effect, stock market, behavioral finance

Chen,S. (2023). “Chemical Reaction” Between Extreme Weather and Stock Market. Advances in Economics, Management and Political Sciences,27,151-156.
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References

[1]. Cunningham, Michael R.Weather, mood, and helping behavior: Quasi experiments with the sunshine samaritan[J].Journal of Personality and Social Psychology 37 (1979): 1947-1956.

[2]. Howarth E, Hoffman M S. A multidimensional approach to the relationship between mood and weather[J]. British Journal of Psychology, 1984, 75(1): 15-23.

[3]. Baker,M. and J. Stein. Market Liquidity as a Sentiment Indicator[J], Journal of Financial Markets.7,271—299.

[4]. Barberis, N., A.Shleifer and R.Vishny. A Model of Investor Sentiment[J], Journal of Financial Economics,49,307—343.

[5]. Han, B. Investor Sentiment and Option Prices[J], Review of Financial Studies,21,387—414.

[6]. Baker, M. and J. Wurgler. Investor Sentiment in the Stock Market[J], Journal of Economic Perspectives,21,129—151.

[7]. Saunders, E. M. Stock Prices and Wall Street Weather[J]. The American Economic Review, 83(5), 1337–1345. http://www.jstor.org/stable/2117565

[8]. Hirshleifer D, Shumway T. Good Day Sunshine: Stock Returns and the Weather[J]. Journal of finance,2003:1009-1032.

[9]. Lucey, B.M. and Dowling, M. The Role of Feelings in Investor Decision-Making[J]. Journal of Economic Surveys, 19: 211-237

[10]. Daniel, K., Hirshleifer, D., and Subrahmanyam, A. Investor Psychology and Investor Security Market under- and Overreactions. Journal of Finance, 53, 1839-1886.

[11]. Jacobsen, Ben, and Wessel Marquering. Is it the weather?[J].Journal of Banking & Finance 32.4 (2008): 526-540.

[12]. Suleyman, I. C., M. Burak KAHYAOĞLU, and Devlet ODABAŞ. The effects of weather on investor behavior: A study on individual Turkish stock market investors[J]. Journal of Business Economics and Finance 3.2 (2014): 191-206.

[13]. Kathiravan, Chinnadurai, et al.Investor behavior and weather factors: evidences from Asian region[J].Annals of Operations Research 299.1 (2021): 349-373.

[14]. Peillex, J., El Ouadghiri, I., Gomes, M., and Jaballah, J.Extreme heat and stock market activity[J], Ecological Economics, Vol.179,106810.

Cite this article

Chen,S. (2023). “Chemical Reaction” Between Extreme Weather and Stock Market. Advances in Economics, Management and Political Sciences,27,151-156.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 7th International Conference on Economic Management and Green Development

ISBN：978-1-83558-075-2(Print) / 978-1-83558-076-9(Online)
Editor：Canh Thien Dang
Conference website: https://www.icemgd.org/
Conference date: 6 August 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.27
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Cunningham, Michael R.Weather, mood, and helping behavior: Quasi experiments with the sunshine samaritan[J].Journal of Personality and Social Psychology 37 (1979): 1947-1956.

[2]. Howarth E, Hoffman M S. A multidimensional approach to the relationship between mood and weather[J]. British Journal of Psychology, 1984, 75(1): 15-23.

[3]. Baker,M. and J. Stein. Market Liquidity as a Sentiment Indicator[J], Journal of Financial Markets.7,271—299.

[4]. Barberis, N., A.Shleifer and R.Vishny. A Model of Investor Sentiment[J], Journal of Financial Economics,49,307—343.

[5]. Han, B. Investor Sentiment and Option Prices[J], Review of Financial Studies,21,387—414.

[6]. Baker, M. and J. Wurgler. Investor Sentiment in the Stock Market[J], Journal of Economic Perspectives,21,129—151.

[7]. Saunders, E. M. Stock Prices and Wall Street Weather[J]. The American Economic Review, 83(5), 1337–1345. http://www.jstor.org/stable/2117565

[8]. Hirshleifer D, Shumway T. Good Day Sunshine: Stock Returns and the Weather[J]. Journal of finance,2003:1009-1032.

[9]. Lucey, B.M. and Dowling, M. The Role of Feelings in Investor Decision-Making[J]. Journal of Economic Surveys, 19: 211-237

[10]. Daniel, K., Hirshleifer, D., and Subrahmanyam, A. Investor Psychology and Investor Security Market under- and Overreactions. Journal of Finance, 53, 1839-1886.

[11]. Jacobsen, Ben, and Wessel Marquering. Is it the weather?[J].Journal of Banking & Finance 32.4 (2008): 526-540.

[12]. Suleyman, I. C., M. Burak KAHYAOĞLU, and Devlet ODABAŞ. The effects of weather on investor behavior: A study on individual Turkish stock market investors[J]. Journal of Business Economics and Finance 3.2 (2014): 191-206.

[13]. Kathiravan, Chinnadurai, et al.Investor behavior and weather factors: evidences from Asian region[J].Annals of Operations Research 299.1 (2021): 349-373.

[14]. Peillex, J., El Ouadghiri, I., Gomes, M., and Jaballah, J.Extreme heat and stock market activity[J], Ecological Economics, Vol.179,106810.

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