The Effects of Daylight Saving Time Adjustments on Investor Information Processing

Tyler J. Kleppe, Andrew T. Pierce, Zac Wiebe, Teri Lombardi Yohn

Research output: Contribution to journalArticlepeer-review

Abstract

Although daylight saving time (DST) is thought to provide economic benefits, extant research documents various adverse effects of DST adjustments. However, prior research provides little conclusive evidence about the effects of DST adjustments on capital market participants. We examine the effects of “spring forward” DST advances, which disrupt the human sleep cycle and economic activities, on investors’ processing of earnings news. We find a delayed price response to earnings news released during the first week following a DST advance. We also find that this effect is stronger among firms with investors who are more likely to be trading on earnings news and among firms with less sophisticated investors. Our findings contribute to research on the unintended consequences of DST adjustments and to the growing literature on intra-investor variation in disclosure processing costs. Our study may be of interest to legislators currently debating proposed legislation that would eliminate DST phasing.

Original languageEnglish
Pages (from-to)249-277
Number of pages29
JournalAccounting Review
Volume99
Issue number2
DOIs
StatePublished - Mar 2024

Bibliographical note

Publisher Copyright:
© 2024 American Accounting Association. All rights reserved.

Keywords

  • daylight saving time
  • disclosure processing
  • earnings announcements
  • price discovery

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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