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Sport Sentiments and Stock Returns: Example of FIFA World Cups

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  • Jen-Sin Lee
  • Ching-Wei Chiu

Abstract

This paper investigates the relation between sport sentiments and excess stock returns, and our data is from the 17th to 20th FIFA World Cups. Many studies find the relation between sport sentiments and stock market returns. In contrast to the previous studies, this paper considers seven conditions: (1) Considering stock markets are efficient markets, this paper uses not only close price but also open price to estimate excess stock returns which is affected by game results; (2) This paper further considers that sport sentiments affect sponsors¡¯ excess stock returns (this point is seldom discussed by the past literature); (3) This paper further considers a time-lagged effect between sport sentiments and excess stock returns. (4) This paper further considers the persistent effect of previous games result. (5) This paper further employs the samples by not only for all participant countries but also for the each of participant countries. (6) This paper further considers the conditions of extreme wins and extreme loses. (7) This paper further considers the samples of championship games to exam the relation between sport sentiments and excess stock returns. Our results find that sport sentiments does not affect stock market returns, the reason is that investors are rational in dealing with sport sentiments (FIFA World Cup) and the stock trading decisions. This paper further finds Sponsors effect hypothesis: A significant positive/ negative effect on sponsors¡¯ excess stock returns after wins/ loses in the championship games, and this effect only occurs on the open price of the next trading day. These empirical results can offer an important information for the investors of sport sponsor stocks.

Suggested Citation

  • Jen-Sin Lee & Ching-Wei Chiu, 2017. "Sport Sentiments and Stock Returns: Example of FIFA World Cups," Applied Economics and Finance, Redfame publishing, vol. 4(2), pages 44-56, March.
    • Handle: RePEc:rfa:aefjnl:v:4:y:2017:i:2:p:44-56
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    References listed on IDEAS

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    1. Christian Klein & Bernhard Zwergel & Sebastian Heiden, 2009. "On the existence of sports sentiment: the relation between football match results and stock index returns in Europe," Review of Managerial Science, Springer, vol. 3(3), pages 191-208, November.
    2. Yu, Jianfeng & Yuan, Yu, 2011. "Investor sentiment and the mean-variance relation," Journal of Financial Economics, Elsevier, vol. 100(2), pages 367-381, May.
    3. Fung, Ka Wai Terence & Demir, Ender & Lau, Chi Keung Marco & Chan, Kwok Ho, 2015. "Reexamining sports-sentiment hypothesis: Microeconomic evidences from Borsa Istanbul," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 34(C), pages 337-355.
    4. Kim, Chan-Wung & Park, Jinwoo, 1994. "Holiday Effects and Stock Returns: Further Evidence," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 29(1), pages 145-157, March.
    5. Stracca, Livio, 2004. "Behavioral finance and asset prices: Where do we stand?," Journal of Economic Psychology, Elsevier, vol. 25(3), pages 373-405, June.
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    Cited by:

    1. Steffen Hundt & Andreas Horsch, 2019. "Sponsorship of the FIFA world cup, shareholder wealth, and the impact of corruption," Applied Economics, Taylor & Francis Journals, vol. 51(23), pages 2468-2491, May.

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    More about this item

    Keywords

    sport sentiments; stock returns; open price; sponsor; sponsors effect hypothesis;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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