Sports Sentiment and Stock Returns

TLDR

Psychological evidence links soccer outcomes to investor mood. This paper investigates the stock market reaction to sudden changes in investor mood. We use international soccer results as a primary mood variable. Soccer losses trigger significant market declines, with World Cup elimination losses producing a next‑day abnormal return of −49 basis points, a stronger effect in small stocks and high‑importance games, and similar loss effects observed after cricket, rugby, and basketball matches.

Abstract

ABSTRACT 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.