You Lose, I Feel Better

Abstract

This study considers the game-related performance of two listed soccer clubs in Italy which share the same stadium: Roma and Lazio. We introduce the performance of the archrival in the analysis. The high level of rivalry in sports should lead to a feeling of pleasure at the suffering of another group (known in German as Schadenfreude) and we assume to see the satisfaction of investor fans with the defeat of the archrival. Likewise, the win of the archrival can have a negative impact on the mood of investors. This study shows that, when club supporters experience the negative performance of their team, the results of their archrival can affect their investment decisions. It is therefore proven that, at least in this respect, the investors (also widely represented by club supporters) are driven by the sentiments conveyed by rivalry which, considered to be a source of emotion, may be relevant to the market.

New Season New Hopes: Off-Season Optimism

“…This fact by itself implies a behavioral bias since a positive news should normally be a negative news for the other competing clubs. For example, Demir and Rigoni (2017) show the effects of rival team's performance on the fan investors of a team.…”

“…It is concluded that proportion of variation in stock prices explained by match results is very small for 19 English clubs. Demir and Rigoni (2017) are the first introducing the performance of the archrival on stock market reaction to soccer performance analysis for Italy. They find that when club supporters experience the negative performance of their team, the results of their archrival affect their investment decisions.…”

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

“…Demir and Danis (2011) analyze this issue before but with different results. In particular, Demir and Rigoni (2017) find that stock markets react more reliably to the effects of European competitions than to that of the domestic ones. However, Demir and Danis (2011) find that stock markets do not react differently to the results of the European and local (Turkey) leagues.…”

“…Clubs receive their revenues mainly from competitions in which they participate. However, they also receive a substantial amount of revenues from merchandising, sponsors, and media contracts (Demir & Rigoni, 2017). More intense domestic and international competitions motivate clubs to generate more revenues (Demir & Danis, 2011).…”

“…According to Demir & Rigoni (2017) and Gallagher & O'Sullivan (2011) financial markets enable clubs to transfer their risks to other parties by offering commensurate returns. Also, financial markets facilitate separation of ownership and control to create optimal allocations of scarce resources.…”