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Weather alerts and stock market reactions: Evidence from China

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  • Wang, Meng
  • Duan, Yixue
  • Yang, Guang-Zhao

Abstract

This paper investigates the impact of weather alerts on stock market performance. Following an alert, next-day firm-level returns decline significantly, turnover increases, and short-horizon volatility rises. Alerts announced the day before trading are associated with lower average returns over the subsequent five trading days. These patterns are consistent with precautionary trading and heightened uncertainty. Stronger alerts, especially orange warnings, generate larger market responses. Alerts that are more closely related to weather-induced sentiment also produce stronger effects. We further show that investor attention increases sharply after alerts, as measured by firm-level search intensity. Our findings provide firm-level evidence on the link between weather risk and financial market behavior.

Suggested Citation

  • Wang, Meng & Duan, Yixue & Yang, Guang-Zhao, 2026. "Weather alerts and stock market reactions: Evidence from China," Finance Research Letters, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:finlet:v:93:y:2026:i:c:s1544612326001595
    DOI: 10.1016/j.frl.2026.109628
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    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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