Football Results Investor Sentiment and Stock Market Returns

Felix Meurer & Jonas Karl Gerhard Iver Kehler

Student thesis: Master thesis


This thesis examines the relationship between mood changing events and stock market reactions. Motivated by psychological literature providing a link between football results and sudden changes in mood, the analysis uses international football data of national teams as the mood affecting variable. Therefore, this thesis identifies football results as a proxy for investor’s sentiment influencing their risk assessment and causing positive or negative abnormal market returns. The thesis examines a potential win- and loss-effect for 2,032 football games excluding draws from the sample. To assure the relevance of the respective games the sample includes matches from the World Cup, Gold Cup, Copa America, European Championship and Asian Cup in addition to qualification games of closely matched teams. The results provide evidence for a significant loss effect. A loss is associated with a negative abnormal return of -15.84 basis points on the first trading day after the match. The loss effect is stronger for World Cup elimination games, in particular amplified for host countries experiencing a defeat in the elimination stage of a World Cup and robust to any methodological adjustments. A win effect could solely be confirmed for unexpected wins, with an ex-ante win probability of 40 percent or less.

EducationsMSc in Finance and Investments, (Graduate Programme) Final Thesis
Publication date2019
Number of pages120
SupervisorsKathrin Schlafmann