Make Hay While The Sun Shines? Research into the relationship between weather conditions and stock returns

Research suggest that the weather influences our mood, which affects the decision-making process. This could imply that the weather influences stock returns. This paper examines the effects of sun and rain on the stock returns of ten cities from 1995 till 2005. Most importantly, the question is whether these effects differ between countries on near the equator and countries farther from the equator. The correlations have been estimated and regression analysis have been conducted. The results show that rain and sun have both a negative as well as a positive effect on stock returns. Rain and sun have a negative effect in countries near the equator, but both negative and positive effects in countries farther away from the equator.