Abstract
We find that investors react more favorably to announcements of share repurchases, SEOs, acquisitions, and earnings if the announcement is made immediately prior to or on holidays. Preholiday corporate announcements are associated with more positive reactions for favorable events and less negative reactions for unfavorable events. We provide direct evidence pointing to an optimistic preholiday mood as the root cause of abnormally high reactions to preholiday corporate announcements. The results are not driven by aggregate market performance, limited attention, or a selection bias. Our findings suggest that individuals’ anticipation of holidays prompts investors to view firm-specific news through rose-colored glasses.
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