Sports Sentiment and Stock Returns
London Business School - Institute of Finance and Accounting; University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)
University of North Carolina at Chapel Hill - Finance Area
BI Norwegian Business School - Department of Financial Economics
Sixteenth Annual Utah Winter Finance Conference
EFA 2005 Moscow Meetings
This paper investigates the stock market reaction to sudden changes in investor mood. Motivated by psychological evidence of a strong link between soccer outcomes and mood, we use international soccer results as our primary mood variable. We find a significant market decline after soccer losses. For example, a loss in the World Cup elimination stage leads to a next-day abnormal stock return of -49 basis points. This loss effect is stronger in small stocks and in more important games, and is robust to methodological changes. We also document a loss effect after international cricket, rugby, and basketball games.
Number of Pages in PDF File: 47
Keywords: Football, sports, soccer, sentiment, mood, stock returns, behavioral finance
JEL Classification: A12, G14working papers series
Date posted: March 2, 2005
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