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Stock market performance: is the weather a bother in the tropics? Evidence from Ghana

Joseph Emmanuel Tetteh (Department of Banking and Finance, Central University, Accra, Ghana)
Anthony Amoah (Department of Economics, Central University, Accra, Ghana)

Journal of Economic and Administrative Sciences

ISSN: 1026-4116

Article publication date: 30 December 2020

Issue publication date: 22 October 2021

216

Abstract

Purpose

In the wake of climate change and its associated impact on firms' performance, this paper attempts to provide a piece of empirical evidence in support of the effect of weather conditions on the stock market performance.

Design/methodology/approach

Monthly time-series dataset and the fully modified ordinary least square (FMOLS) semi-parametric econometric technique are used to establish the effect of weather variables on stock market return.

Findings

This study finds that temperature and wind speed have a negative and statistically significant relationship with stock market performance. Likewise, humidity exhibits a negative relationship with stock market performance, albeit insignificant. The relevant stock market and macroeconomic control variables are statistically significant in addition to exhibiting their expected signs. The findings lend support to advocates of behavioural factors inclusion in asset pricing and decision-making.

Practical implications

For policy purposes, the authors recommend that traders, investors and stock exchange managers must take into consideration different weather conditions as they influence investors' behaviour, investment decisions, and consequently, the stock market performance.

Originality/value

To the best of the authors’ knowledge, this study provides the first empirical evidence of the nexus between disaggregated weather measures and stock market performance in Ghana. This study uses monthly data (which are very rare in the literature, especially for developing country studies) to provide empirical evidence that weather influences stock market performance.

Keywords

Acknowledgements

The authors are grateful to the Editors, Professor Ghulam A Arain and Dr Rebecca Abraham and the two anonymous referees for their constructive comments on an earlier version of the paper. Also, the authors express their heartfelt gratitude to Mrs Elizabeth Matekoley of Ghana Stock Exchange and Mr Joseph Gberbi and Dr Naomi Kumi of Ghana Meteorological Agency for helping them with the data for this study.Financial assistance disclosure. The authors did not receive financial assistance from any source.

Citation

Tetteh, J.E. and Amoah, A. (2021), "Stock market performance: is the weather a bother in the tropics? Evidence from Ghana", Journal of Economic and Administrative Sciences, Vol. 37 No. 4, pp. 535-553. https://doi.org/10.1108/JEAS-04-2020-0042

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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