47 Pages Posted: 2 Mar 2005 Last revised: 20 Dec 2013
Date Written: May 1, 2006
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.
Keywords: Football, sports, soccer, sentiment, mood, stock returns, behavioral finance
JEL Classification: A12, G14
Suggested Citation: Suggested Citation
Edmans, Alex and Garcia, Diego and Norli, Oyvind, Sports Sentiment and Stock Returns (May 1, 2006). Journal of Finance 62(4), 1967-1998, August 2007. Available at SSRN: https://ssrn.com/abstract=677103 or http://dx.doi.org/10.2139/ssrn.677103
By Alex Edmans