Scoring on the stock exchange? The effect of football matches on stock market returns: an event study

Abstract

We analyse the effect of results of football matches on the stock market performance of football teams. We analyse 1274 matches of eight teams in the national and European competition during 2000–2004. We find that the stock market response is significant and positive for victories and negative for defeats. The response is significantly stronger in the case of defeat. The response is stronger for matches in the European competition than for those in the national competition. Unexpected results have a stronger impact for European matches than expected ones but this is not the case in the national competition.

Notes

¹With football, we mean the game by which two teams of 11 players try to kick a round ball in the goal of the other team. In USA, this game is called soccer.

²Source: UEFA direct 7.07 (www.uefa.com).

³Alternative approaches to assess performance are the econometric model (for example, see Koning, 2003) and data envelopment analysis (Barros and Leach, 2006).

⁴Zuber et al. (2005) exactly go into this issue as they are particularly interested in the investor characteristics of the football fans. Therefore, they do include the zero-return dates.

⁵The design of the European competition differs significantly from that of the national competition. Football teams play only two or a few matches before it is clear whether or not they may proceed to the next round, whereas in the national competition the number of matches is much larger before it is clear who ends as the champion and who is allowed to join the European competition. Furthermore, in the European competition, the teams may earn a bonus from each won match. In this article we strictly focus on investor behaviour with respect to football stocks in relation to match results.