Weather, investor psychology and stock returns: evidence from Fiji's stock market

Purpose This paper investigates whether weather affects stock market returns in Fiji's stock market. Design/methodology/approach The author employed an exponential general autoregressive conditional heteroskedastic (EGARCH) modeling framework to examine the effect of weather changes on stock market returns over the sample period 9/02/2000-31/12/2020. Findings The results show that weather (temperature, rain, humidity and sunshine duration) have robust but heterogenous effects on stock market returns in Fiji. Research limitations/implications It is useful for scholars to modify asset pricing models to include weather-related variables (temperature, rain, humidity and sunshine duration) to better understand Fiji's stock market dynamics (even though they are often viewed as economically neutral variables). Practical implications Investors and traders should consider their mood while making stock market decisions to lessen mood-induced errors. Originality/value This is the first attempt to examine the effect of weather (temperature, rain, humidity and sunshine duration) on stock market returns in Fiji's stock market.