Circadian rhythms are our natural sleep-wake cycles, our body clock. They play a significant role in every cell in our body but also in our cognitive function. Within waking hours, an individual reaches peak performance during their circadian "acrophase", and their performance drops during their "circadian nadir". The timing of this window of optimal alertness classifies individuals as either a morning lark or night owl chronotype. Larks experience peak cognitive performance in the morning and the opposite is true of owls, who perform better in the evening. Research has shown that circadian rhythms can thus impact investment decision-making.

One recent study found that people are more likely to make successful investment decisions when they make them in line with their chronotype, morning for larks, evening for owls. This is because our circadian rhythms control our cognitive resources and we are better able to process information, think deeply about data presented and make effective decisions rather than during a circadian nadir when there is over reliance on superficial information and decreased working memory.

Another study found that leaders who are more in tune with their circadian rhythms are more likely to make effective decisions. For example, if night owls are unable to adjust their work schedules to their later chronotype, they tend to have lower emotional control and higher dysfunctional impulsivity, making them less effective at building relationships. Chronotypes also lend themselves to differing characteristics; morning larks tend to be more proactive and future orientated, more optimistic and persistent. Night owls tend to be more creative, and have a high desire for new experiences and a willingness to take risks. Thus, night owl leaders are more likely to be innovative but less likely to implement these ideas while morning lark leaders more likely to pursue and implement changes but less likely to develop them in the first place.

This is known as the synchrony effect and highlights the importance of being aware of chronotype and scheduling workday activities to align with morningness or eveningness according to peak activation. This could include holding meetings for tasks that require focus and concentration in the morning whilst meetings that require creativity and brainstorming are held in the afternoon. Furthermore, being cognisant of others' morningness or eveningness may result in better communication, with more concise information for morning larks, and more creative and descriptive communication with night owls, or delegation, with tasks that require focus and concentration being more suited to morning larks, and tasks that require creativity and brainstorming more aligned night owls.