Abstract
Prior research in psychology predicts that sunny weather is associated with creativity, optimism, and risk-taking behavior. In this paper, we examine the effect of weather-induced mood on patent inventors’ productivity and the value implication of such an effect. Using an annual measure of relative sunshine around each inventor’s residential location, we document that inventors exposed to more sunshine during a year create patents with higher market valuation and more forward citations. Our results hold after addressing alternative explanations and conducting an exhaustive array of robustness tests. Furthermore, we show that inventors exposed to more sunshine engage in greater specialization rather than experimentation. Our paper is among the first to show that weather conditions have a real effect on firm value through the innovation channel.
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