When chronobiology met economics: Seasonal affective disorder and the demand for initial public offerings

Doron Kliger, Gregory Gurevich, Abraham Haim

Research output: Contribution to journalArticlepeer-review


Standard economic theory presumes invariant preferences. We refute this presumption on chronobiological grounds, documenting the impact of seasonal affective disorder on investors' demand for initial public offerings (IPOs). We found that seasonal mood substantially influences short-and long-run IPO performance: (a) examining IPO first trading days indicates that, in the short run, stocks issued in short, decreasing, photoperiods (i.e., days associated with depressing daylight conditions), earn lower returns than stocks issued in long, increasing, photoperiods (i.e., cheerful days); (b) by a quarter of a year, the stocks' cum-initial-returns are equated, implying that the short-run initial excess returns of the stocks issued in the cheerful periods are fully absorbed by subsequent performance; and (c) in the long run, the stocks issued in the cheerful periods continue to underperform (until about a year and a half) and subsequently (up to 3 years) possibly revert to the grand average of IPO underperformance. The average initial return differential between the IPOs issued in depressing and cheerful days is in the sizable order of between 5 and 10% of the offering, approaching 15-25% for the relatively less publicly exposed firms, as assessed using a database of 1,526 IPOs with average gross proceeds of $15 million.

Original languageAmerican English
Pages (from-to)131-151
Number of pages21
JournalJournal of Neuroscience, Psychology, and Economics
Issue number3
StatePublished - Aug 2012


  • Behavioral finance
  • Chronobiology
  • Chronoeconomics
  • Initial public offerings
  • Seasonal affective disorder
  • Stocks

All Science Journal Classification (ASJC) codes

  • Neuropsychology and Physiological Psychology
  • Experimental and Cognitive Psychology
  • Business, Management and Accounting (miscellaneous)
  • Applied Psychology
  • Economics, Econometrics and Finance (miscellaneous)
  • Cognitive Neuroscience
  • Behavioral Neuroscience


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