Sport Sentiments and Stock Returns: Example of FIFA World Cups

Jen-Sin Lee, Ching-Wei Chiu


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.

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Applied Economics and Finance    ISSN 2332-7294 (Print)   ISSN 2332-7308 (Online)

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