It Hurts (Stock Prices) When Your Team is About to Lose a Soccer Match

37 Pages Posted: 29 Jan 2014

See all articles by Michael Ehrmann

Michael Ehrmann

European Central Bank (ECB); Bank of Canada

David-Jan Jansen

De Nederlandsche Bank ; Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute

Date Written: January 9, 2014

Abstract

The end result of major sporting events has been shown to affect next-day stock returns through shifts in investor mood. By studying the soccer matches that led to the elimination of France and Italy from the 2010 FIFA World Cup, we show that mood-related pricing effects can materialize as sporting events unfold. We do this by using intra-day stock prices for a firm cross-listed on the Paris and Milan stock exchange. This strategy allows for a straightforward identification of pricing effects. During the soccer matches, stock prices in the country that eventually loses are lower by up to seven basis points. The probability of underpricing increases as elimination from the tournament becomes more likely.

Keywords: investor mood, cross-listed firms, stock market efficiency, high-frequency data, soccer

JEL Classification: G02, G12, G14, G15

Suggested Citation

Ehrmann, Michael and Jansen, David-Jan, It Hurts (Stock Prices) When Your Team is About to Lose a Soccer Match (January 9, 2014). De Nederlandsche Bank Working Paper No. 412, Available at SSRN: https://ssrn.com/abstract=2386679 or http://dx.doi.org/10.2139/ssrn.2386679

Michael Ehrmann

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344/7327 (Phone)
+49 69 1344/6000 (Fax)

Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

David-Jan Jansen (Contact Author)

De Nederlandsche Bank ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands

HOME PAGE: http://sites.google.com/site/djansenresearch

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
137
Abstract Views
965
Rank
379,275
PlumX Metrics