Investor Sentiment, Soccer Games and Stock Returns

26 Pages Posted: 29 Jun 2015

See all articles by Nebojsa Dimic

Nebojsa Dimic

University of Vaasa

Manfred Neudl

University of Vaasa - Department of Accounting and Finance

Vitaly Orlov

University of St. Gallen - School of Finance

Janne Jaakko Äijö

University of Vaasa, Department of Accounting and Finance

Date Written: June 1, 2015

Abstract

This study examines two determinants of investor sentiment (ex-ante evaluation of future value-related events and ex-post reaction to event outcomes) using the data on soccer games and betting odds. Results suggest that the magnitude and the character of investor reactions vary considerably after the release of negative and positive information on soccer games. Bad news generates a larger price response than good news; implying post-event irrational investor behavior and sentiment-induced overreaction. Moreover, negative news is more slowly absorbed by the stock market than positive news due to psychological biases and lack of information salience around negative results. Finally, share prices are triggered to a larger extent by post-announcement investor irrationality than by pre-event expectation.

Keywords: Investor sentiment, Soccer, Sports betting, Market efficiency

JEL Classification: G12, G14

Suggested Citation

Dimic, Nebojsa and Neudl, Manfred and Orlov, Vitaly and Äijö, Janne Jaakko, Investor Sentiment, Soccer Games and Stock Returns (June 1, 2015). Available at SSRN: https://ssrn.com/abstract=2623994 or http://dx.doi.org/10.2139/ssrn.2623994

Nebojsa Dimic

University of Vaasa ( email )

Wolffintie 34
Vaasa, 65200
Finland

Manfred Neudl

University of Vaasa - Department of Accounting and Finance ( email )

P.O. Box 700
FIN-65101 Vaasa, FI-65101
Finland

Vitaly Orlov (Contact Author)

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Janne Jaakko Äijö

University of Vaasa, Department of Accounting and Finance ( email )

P.O. Box 700
FIN-65101 Vaasa
Finland

HOME PAGE: http://www.uwasa.fi/~jja

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