“Weather‐Induced Managerial Mood and Optimistic Earnings Forecasts” by Dr. Yangyang CHEN
Dr. Yangyang CHEN
Assistant Professor of Accounting
School of Accounting and Finance
The Hong Kong Polytechnic University
Prior research shows that weather‐induced mood impacts individuals’ judgments and decisions. Using a localized sunshine‐based indicator of optimism, we examine whether mood influences the managerial earnings forecasts of U.S. firms. We find that managers with greater sunshine exposure preceding the earnings forecast make more optimistic predictions about future earnings. This effect is statistically robust and economically significant. We also find that the documented effect of local sunshine on earnings forecasts is mitigated when managers are more risk‐averse, when managers are more experienced, and when managers work in stricter legal environments. Collectively, our findings show that weather‐induced managerial mood is a significant determinant of managerial dissemination of information to shareholders.