Sun and colleagues link experiencing sunlight and taking more risks. More specifically they report that “We examine sunshine-induced mood and its impacts on investors’ bidding decisions in the primary market where seasoned equities are offered. . . . . We find that investors exposed to stronger sunshine intensity or longer sunshine duration submit a higher bid price for SEOs [seasoned equity offerings], thus leading to lower offer discounts. We also find that mood misattribution and risk-taking act as channels to rationalize such a sunshine effect. Our moderating analyses indicate that the documented impact strengthens in the case of greater uncertainty, less-frequent bidders, retail investors, and lower levels of investment. These sunshine effects impact failed bids, SEO participation and SEOs’ long-term performance. Our study provides original evidence that investors in the primary market can be influenced by a sunshine-induced mood, which, in turn, determines the cost of equity financing.”
Qian Sun, Xiaoke Cheng, Shenghao Gao, Tao Chen, and Jia Liu. 2023. “Sunshine-Induced Mood and SEO Pricing: Evidence from Detailed Investor Bids in SEO Auctions.” Journal of Corporate Finance, vol. 80, 102411, https://doi.org/10.1016/j.jcorfin.2023.102411
Sally Augustin, PhD, a cognitive scientist, is the editor of Research Design Connections (www.researchdesignconnections.com), a monthly subscription newsletter and free daily blog, where recent and classic research in the social, design, and physical sciences that can inform designers’ work are presented in straightforward language. Readers learn about the latest research findings immediately, before they’re available elsewhere. Sally, who is a Fellow of the American Psychological Association, is also the author of Place Advantage: Applied Psychology for Interior Architecture (Wiley, 2009) and, with Cindy Coleman, The Designer’s Guide to Doing Research: Applying Knowledge to Inform Design (Wiley, 2012). She is a principal at Design With Science (www.designwithscience.com) and can be reached at sallyaugustin@designwithscience.com.