Investor sentiment, soccer games and stock returns

Dimic, Nebojsa; Neudl, Manfred; Orlov, Vitaly; Äijö, Janne

doi:10.1016/j.ribaf.2017.07.134

Cited by 17 publications

(20 citation statements)

References 26 publications

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“…Comparing the results for the mean returns after wins and losses exhibits a strong asymmetry effect for individual clubs. This finding is consistent with past studies documenting asymmetry in stock market responses between good and bad news (Dimic et al 2017;Scholtens and Peenstra 2009). Edmans, Garcia, and Norli (2007) explain this finding by the asymmetric structure of international competitions.…”

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confidence: 93%

Do stock markets react to soccer games? A meta-regression analysis

2017

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This study applies meta-regression analysis to aggregate a sample of 1,126 empirical estimates of the stock market reaction to soccer matches collected from 37 primary studies. Our results indicate that winning a match is not associated with significant return effects for both national teams and individual clubs. In the case of lost matches, we find strong evidence for publication bias, i.e. negative returns are systematically overrepresented causing a biased picture of the true soccer match effect. After correcting for this bias, the mean return after losses by national teams becomes statistically insignificant and accounts for only −5 basis points. In the case of individual clubs, the corrected impact of a loss is a significant −39 basis points effect. In a further analysis, we identify various aspects of study design like regional differences, time period under examination, and the design of empirical analysis to be responsible for the wide variation in previous study outcomes. Overall, our findings provide evidence against the hypothesis that stock markets are driven by sports sentiment in the case of national teams. Due to the existence of strong asymmetry in the returns after wins and losses of individual clubs, behavioural explanations cannot be fully ruled out.

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confidence: 93%

Do stock markets react to soccer games? A meta-regression analysis

2017

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“…Due to the influence of non-market interaction (or social interaction) mechanisms, asset prices often deviate from fundamental levels [5,6]. Investors do not make investment decisions completely based on the fundamental information of assets, but more on intuition and other irrational sentiments [7]. This mechanism makes even developed financial markets more uncertain and unpredictable [8].…”

Section: Introductionmentioning

confidence: 99%

Can Stock Investor Sentiment Be Contagious in China?

Cai

Ran

2020

Sustainability

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This paper explores the impact of investor sentiment on financial markets in China by taking the quantile causality test. We find that government bond markets, gold markets, and foreign exchange markets are affected by stock investor sentiment, except for in the corporate bond market. In extreme situations, such as excessively optimistic or pessimistic sentiment, these markets will become more vulnerable to suffering from drastic fluctuations. On the contrary, the market return in government bonds, corporate bonds, and foreign exchange also has an influence on stock investor sentiment. Moreover, these links show various asymmetry due to the heterogeneity of different financial markets. Our results are consistent with the noise trader model, which shows the impact of investor sentiment on market returns. Hence, the authorities can sustain the stabilization of financial markets by reducing information asymmetry, guiding the rational sentiment of investors, and increasing effective regulations.Especially in certain extreme pessimistic situations, sentiment in the stock market can lead to drastic fluctuations in other financial markets [15,16], and the authorities cannot maintain market stability and continuity of development. In turn, the performance of these markets is also a remarkable barometer that leads stock investor sentiment to change [17]. Through information in different market environments, external shocks, not only make asset price fluctuate, but also result in stock investors overreacting, and this affects their investment expectations [18]. This bidirectional transmission is regarded as an important factor for the linkage among major financial markets [19]. Hence, investor sentiment plays an important role in the formation of financial market effectiveness. If investor sentiment cannot be reasonably guided, it will be difficult to suppress irrational trading and speculative bubbles and improve market efficiency.Compared with stock markets in developed countries, individual investors account for a large proportion of Chinese stock investors, which makes the whole market more emotional [20]. With a lack of social responsibility and an awareness of sustaining market efficiency, the individual Chinese investor has an underdeveloped investment education and, thus, they often show irrational investment behavior [21]. Hence, market fluctuation frequently happens, and it is difficult for investor sentiment to be properly guided. Not only do investors make irrational trades in the stock market, but they are also more likely to carry their emotions to other markets [22]. If investor sentiment in the stock market spreads to other markets and causes unexpected fluctuations in China, the pricing and operating efficiency of many financial markets will be damaged. As well as the stock market, the gold, bond, and foreign exchange markets are all financial markets with a large scale in China. If such emotional contagion exists in China, investors who excessively ignore the fundamentals will find it difficult to form th...

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“…Football clubs will potentially receive more revenues depending on their performance in these competitions (Dimic, Neudl, Orlov, & Äijö, 2018). Match venues can also affect fans' expectations for their clubs' performance.…”

Section: Introductionmentioning

confidence: 99%

“…The findings provide evidence on the importance of venues and competition types' match results in making investment decisions. The same match results (wins or losses) from different competition or venue types will prompt a different investors' reaction (Gerlach, 2011;Bernile & Lyandres, 2011;Dimic et al, 2018). Market reactions to winning at home matches are higher than winning at away events.…”

Section: Introductionmentioning

confidence: 99%

Market reactions to football match results: The effect of venues and competition types

Dwi¹,

Dorkas²,

Huruta³

2021

EurJ Appl Econ

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This study seeks to investigate the stock market reaction to football match results in different venues and competition types, especially for three major football clubs: Manchester United, Juventus FC, and Borussia Dortmund. We use a parametric paired sample t-test. The findings show that investors take not only match results but also venues and competition types into consideration when making investment decisions. This study indicates the stock markets of football clubs are semi-strong efficient markets. Different market reaction to match results for each football club studied implies the importance of understanding the specific characteristics of those clubs in making investment decisions. The findings suggest the football club investors need to consider their clubs' competitive performance in different venues and competition types when making portfolio investment decisions. This study complemented the previous assumption on the importance of venues, and competition types match results in making investment decisions.

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Investor sentiment, soccer games and stock returns

Cited by 17 publications

References 26 publications

Do stock markets react to soccer games? A meta-regression analysis

Do stock markets react to soccer games? A meta-regression analysis

Can Stock Investor Sentiment Be Contagious in China?

Market reactions to football match results: The effect of venues and competition types

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