World Cup results affect stock markets?

///World Cup results affect stock markets?

World Cup results affect stock markets?

By | 2017-01-18T12:13:07+00:00 June 12th, 2014|Research Insights|1 Comment
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(Last Updated On: January 18, 2017)

Sports Sentiment and Stock Returns


This paper investigates the stock market reaction to sudden changes in investor mood. Motivated by psychological evidence of a strong link between soccer outcomes and mood, we use international soccer results as our primary mood variable. We find a significant market decline after soccer losses. For example, a loss in the World Cup elimination stage leads to a next-day abnormal stock return of -49 basis points. This loss effect is stronger in small stocks and in more important games, and is robust to methodological changes. We also document a loss effect after international cricket, rugby, and basketball games.

Alpha Highlight:

With the World Cup starting today, we wanted to highlight an interesting paper on sports sentiment and its affect on stock returns.


The table below examines how a country’s win or loss in soccer games affect stock returns the next day (US and Canada are excluded). The data is from 8 World Cups between 1974 and 2004.

Sports sentiment and stock returns

Two takeaways from the table:

  1. Winning does not have a statistically significant affect on stock returns, while losing does.
  2. Being eliminated from the World Cup produces the lowest abnormal returns the next day, at -49.4 bps.

Excited for the World Cup to begin!

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About the Author:

Jack Vogel, Ph.D., conducts research in empirical asset pricing and behavioral finance, and is a co-author of DIY FINANCIAL ADVISOR: A Simple Solution to Build and Protect Your Wealth. His dissertation investigates how behavioral biases affect the value anomaly. His academic background includes experience as an instructor and research assistant at Drexel University in both the Finance and Mathematics departments, as well as a Finance instructor at Villanova University. Dr. Vogel is currently a Managing Member of Alpha Architect, LLC, an SEC-Registered Investment Advisor, where he heads the research department and serves as the Chief Financial Officer. He has a PhD in Finance and a MS in Mathematics from Drexel University, and graduated summa cum laude with a BS in Mathematics and Education from The University of Scranton.