Sports sentiment and stock returns

Sports sentiment and stock returns

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Article ID: iaor2009772
Country: United Kingdom
Volume: 62
Issue: 4
Start Page Number: 1967
End Page Number: 1998
Publication Date: Aug 2007
Journal: Journal of Finance
Authors: , ,
Keywords: sports
Abstract:

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.

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