Short-term impacts of the cricket match performances on national share markets – a case study of India and Australia

Abstract

We investigate the impact that investor sentiment can have on stock market following performances by the national cricket teams of India and Australia in one-day cricket matches from 1990 to 2011. Motivated by previous findings of cricket's impacts on stock markets, this study expands on previous research by investigating whether performances of individuals within the teams can also have an impact on their respective leading stock indices. Using an event study, we find no evidence of player or team performances significantly impacting the stock or futures markets. However, we find evidence of a ‘mood effect’ of poor performance by key players of national cricket teams in terms of significant drop in trading volumes in the following day. Our research poses and statistically examines some interesting questions and opens up the field for further research on this intriguing topic of sporting event impacts on national economies.

Notes

^1. The Indian spot market data were extracted from an online database accessed via the Bombay Stock Exchange website, www.bseindia.com, whilst the NIFTY futures data were extracted from an online database accessed via the National Stock Exchange of India website, www.nse-india.com. Australian spot market data were taken from http://au.finance.yahoo.com/ and US market index data were collected from Datastream.

^2. The estimation time-window has been taken as the 250 trading days before the event occurrence, which in this case is either the positive or negative outcome in a cricket match. This estimation time-window has been used to determine the typical returns of the market, thereby allowing a proxy for expected return to be formulated.

^3. For the sake of brevity we have not included the table of low scoring results of Australian batsmen.

^4. We also analysed the effect of a cricketer scoring 100 runs or more, but did not find statistically significant CARs.

^5. For the sake of brevity, we have not included this table.

^6. The first official Twenty20 cricket matches were played on 13 June 2003, amongst the English cricket counties in the Twenty20 Cup. The inaugural international Twenty20 match was played between Australia and New Zealand in Auckland on 17 February 2005, with Australia winning the match by 44 runs.

^7. Ricky Ponting was quoted after the first Twenty20 International in 2005 as saying Twenty20 is ‘difficult to play seriously’ and that ‘if it does become an international game then I'm sure the novelty won't be there all the time’ – http://www.espncricinfo.com/wisdenalmanack/content/story/288833.html (accessed June 1, 2012).