Is Daylight Saving Time Hurting Your Wealth?

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Woman shutting off her alarm clock
eldar nurkovic /

Each year, the nation “springs ahead” and adjusts its collective clock for daylight saving time. The result is millions of folks who stumble around in a groggy haze until their bodies adjust to the new reality.

Previous research has shown that the disturbance in our circadian rhythm that accompanies the transition to DST can have a detrimental impact on our ability to make sound decisions. For example, people have more pronounced mood swings during this time, and car accidents and heart attacks increase.

Now, a study suggests that the negative impact of DST may extend all the way to our personal wealth.

DST itself falls during the spring corporate earnings season, a time when publicly traded companies release important financial information, notes Tyler Kleppe, a certified public accountant and assistant professor at the University of Kentucky’s Gatton College of Business and Economics.

Kleppe and other study co-authors examined the possible impact of DST on investor behavior in response to earnings releases. The researchers examined quarterly earnings announcements made by U.S. firms during the years 2007 to 2018.

In a summary of the study findings, Kleppe says:

“We looked at the trades of investors immediately following the disclosure of earnings. The idea is, if the earnings news is positive, then investors will buy more stock. However, if the earnings news is negative, or lower than expected, then investors would sell more of the stock.”

However, the researchers discovered that investors display a relatively muted response to corporate earnings announcements issued around the DST transition.

Kleppe attributes this behavior to lower information processing abilities brought on by the time change.

In short, investors do not react as expected to these announcements during this period, which “has implications for your investment returns,” he says.

Kleppe believes the study’s results are one more reason to reconsider the wisdom of continuing the practice of switching to daylight saving time.

He says the study underscores that “these transitions really appear to have a significant impact on our physical, mental, financial health and everything in between.”

The U.S. Congress and at least 19 state legislatures are considering eliminating the time change.

Currently, though, only two states — Arizona and Hawaii — observe standard time year-round, according to the National Conference of State Legislatures. A federal law known as the Uniform Time Act allows states to opt out of annual time changes by observing permanent standard time, but not permanent daylight time.

For now, Kleppe urges investors to try to avoid making major decisions in the days after the transition to daylight saving time.

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