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Local sports sentiment and returns of locally headquartered stocks: A firm-level analysis

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  • Chang, Shao-Chi
  • Chen, Sheng-Syan
  • Chou, Robin K.
  • Lin, Yueh-Hsiang

Abstract

We undertake a firm-level analysis of the relation between National Football League (NFL) game outcomes and the return patterns of Nasdaq firms headquartered geographically near the NFL teams. We find that a team's loss leads to lower next-day returns for locally headquartered stocks and that this impact increases for a surprising loss or a critical game loss. The negative effects of game losses are stronger for stocks that are more vulnerable to shifts in sports sentiment. Our results suggest that the game outcomes of local sports teams influence investor sentiment, which significantly affects the returns of localized trading stocks.

Suggested Citation

  • Chang, Shao-Chi & Chen, Sheng-Syan & Chou, Robin K. & Lin, Yueh-Hsiang, 2012. "Local sports sentiment and returns of locally headquartered stocks: A firm-level analysis," Journal of Empirical Finance, Elsevier, vol. 19(3), pages 309-318.
    • Handle: RePEc:eee:empfin:v:19:y:2012:i:3:p:309-318
    DOI: 10.1016/j.jempfin.2011.12.005
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    More about this item

    Keywords

    Behavior finance; Sports sentiment; Localized trading;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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