The Winner Takes It All: Investor Sentiment and the Eurovision Song Contest

57 Pages Posted: 28 Feb 2022 Last revised: 9 Mar 2022

See all articles by Menachem (Meni) Abudy

Menachem (Meni) Abudy

Bar-Ilan University - Graduate School of Business Administration

Yevgeny Mugerman

Bar Ilan University

Efrat Shust

The Department of Management and Economics, The Open University of Israel

Multiple version iconThere are 2 versions of this paper

Date Written: June 14, 2020

Abstract

This paper investigates the stock market reaction to a change in investor mood following the Eurovision Song Contest—an annual international song competition and one of the most watched non-sporting events globally. Contrary to existing literature on international competitions, we find a positive swing in investor sentiment in the winning country. The elevated atmosphere is reflected in a positive abnormal return of approximately 0.35% on the first trading day after the victory. This finding is robust to various event-study methods and to various benchmarks. This positive return is reversed several days later. Further, we do not find any indication of negative sentiment in other participating countries; specifically, in countries perceived as the losers of the contest. Finally, we do not find any indication that the positive market reaction reflects economic benefits stemming from a victory. Overall, we conjecture that a competition structure is an important determinant of investor sentiment in stock markets.

Keywords: investor sentiment, investor mood, stock market reaction, price reversal

JEL Classification: G10, G14, G41

Suggested Citation

Abudy, Menachem (Meni) and Mugerman, Yevgeny and Shust, Efrat, The Winner Takes It All: Investor Sentiment and the Eurovision Song Contest (June 14, 2020). Available at SSRN: https://ssrn.com/abstract=3602738 or http://dx.doi.org/10.2139/ssrn.3602738

Menachem (Meni) Abudy (Contact Author)

Bar-Ilan University - Graduate School of Business Administration ( email )

Ramat Gan
Israel

Yevgeny Mugerman

Bar Ilan University ( email )

Ramat Gan
5290002
Israel

Efrat Shust

The Department of Management and Economics, The Open University of Israel ( email )

Israel

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