This article presents a brief review and listing of academic papers on football (soccer) and the stock market.
The main focus of research on this topic is on whether the results of football games have an effect on share prices – the majority of papers find that they do. For academics, the interest here is that football results provide an easy and quantifiable proxy for mood, and much of this research therefore comes under the ambit of behavioural finance. Further, the existence of betting markets on football results allow researches to add, and indeed quantify, the relationship between expectations and results and to study the effect of their variance.
Academic research on football and the market focuses on three areas (which is how this review is structured)-
- National teams
- FIFA World Cup
Zuber et al (2005) found that the price behaviour of publicly-quoted English Premier League teams was insensitive to game results; they concluded that a new type of investor gained value from mere share ownership. By contrast, Stadtmann (2006) studied the share price of Borussia Dortmund and found that game results were an important driver of the share price. The research of Berument et al (2006) was partly consistent with both the preceding in finding that the Turkish team Besiktas’s win against foreign rivals in the Winner’s Cup did increase stock market returns, but that no such effect was found for two other Turkish teams: Fenerbahçe and Galatasaray.
Palomino et al (2009) found that stock prices did react strongly to game results generating significant abnormal returns and trading volumes; and, further, that winning team share prices experienced a high level of overreaction. Their research also studied the football betting market and found that while betting odds were a good predictor of game outcomes, investors largely ignored these odds, and that betting information predicted stock price overreactions to game results.
The research of Benkraiem et al (2009) was largely consistent with those that found game results had an influence on returns and trading volumes; their analysis further showed that the extent of the share price effect and timing of it was dependent on the type of result (win, draw, lose) and match venue (home, away). Berument et al (2009) argued that the share price effect on football teams quoted on the Istanbul Exchange increased with the fanaticism of the team’s supporters.
Scholtens and Peenstra (2009) research was again consistent with the finding that match results affected share prices (significant and positive for victories and negative for defeats); and they further found that the effect was significantly stronger for defeats, and stronger in European than for national competitions.
Like Palomino et al (2009), Bernile and Lyandres (2011) analysed the football betting markets to find that investors are overly optimistic about their teams’ prospects before games and disappointed afterwards, which leads to abnormal negative returns after games.
Bell et al (2012), found that share returns were more influenced by important games for English clubs, where “important” was defined as a game having a particular significance for the club’s league position. Godinho and Cerqueira (2014) also incorporated the concept of game importance; they built a model for 13 clubs of six different European countries that weights games according to a new measure of match importance and using the betting markets to isolate the unexpected component of match results; this model finds a significant link between the results and share performance.
Berkowitz and Depken (2014) found that share prices reacted asymmetrically to game results: the negative effect being greater and quicker for losers than the positive effect for winners. They suggested the reason for this is that losing is a stronger predictor of future losing (and lower financial performance) than winning is a predictor of future winning.
2. National teams
Ashton, Gerrard and Hudson (2003) found a strong association between the England football team results and subsequent daily changes in the FTSE 100 index. However the methodology employed by Ashton et al (2003) was later criticised by Klein, Zwergel and Fock (2009) who rejected the presence of any link. In response, Ashton, Gerrard and Hudson (2011) carried out new analysis, using a larger dataset, and re-asserted that a link does exist for the original study period of 1984-2002, although they report that the strength of the link has declined over the subsequent period 2002-2009.
Edmans et al (2007) also found a link between national soccer results of the market; for example, significant markets falls after soccer losses, and effect stronger for smaller stocks and in more important games.
3. FIFA World Cup
Regarding the FIFA World Cup academic research tends to focus on two areas: the effect of the announcement of the World Cup host and market behaviour during and immediately after the World Cup.
Obi, Surujlal and Okubena (2009) found negative abnormal returns for South African shares in the lead up to the announcement that South Africa would host the 2010 World Cup, followed by positive abnormal returns in the aftermath of the announcement. Abuzayed (2013) found evidence of a positive abnormal market return in Qatar linked to the announcement of that country being host for the 2022 FIFA World Cup; and further that the effect was strongest in the service sector.
Vieira (2012) analysed the 2010 FIFA World Cup and found no link between games results and subsequent market behaviour.
Kaplanski and Levy (2010), found that the average return on the US equity market over the period of the World Cup was -2.6% (compared to an average return of +1.2% for similar periods at other times); this effect did not depend on the games’ results and as the aggregate effect depended on many games it was therefore robust. This result was supported by Ralph (2010) who also found an average return of -2% for the same conditions. Kaplanski and Levy (2013) updated their previous research and found that although an abnormal profit still existed for the 2010 World Cup, the price pattern was different from previous World Cups (possibly due the publication of news of this effect just before the 2010 World Cup). They therefore suggest that this effect will vanish in the future.
INDEX (of papers listed below)
[Papers listed in reverse date order; ♠ indicates major paper.]
- Asymmetric Reactions to Good and Bad News as Market Efficiency: Evidence from Publicly-Traded Soccer Clubs 
- The Impact of Expectations, Match Importance and Results in the Stock Prices of European Football Teams 
- Sentiment, Irrationality and Market Efficiency: The Case of the 2010 FIFA World Cup 
- Sport and emerging capital markets: market reaction to the 2022 World Cup announcement 
- Abnormal Returns of Soccer Teams: Reassessing the Informational Value of Betting Odds 
- Moneyball in the Turkish Football League: A Stock Behavior Analysis of Galatasaray and Fenerbahce Based on Information Salience 
- The Effect of Soccer Performance on Stock Return: Empirical Evidence From “The Big Three Clubs” of Turkish Soccer League 
- Market Reaction to Sports Sentiment: Evidence from the European Football Championship 2008 
- Over the moon or sick as a parrot? The effects of football results on a club’s share price 
- Investor sentiment and market reaction: evidence on 2010 FIFA World Cup 
- The Effect of Performance of Soccer Clubs on Their Stock Prices: Evidence from Turkey 
- Understanding Investor Sentiment: The Case of Soccer  ♠
- Do national soccer results really impact on the stock market? 
- Is There a Correlation Between World Cups and S&P 500 Performance? 
- Exploitable Predictable Irrationality: The FIFA World Cup Effect on the U.S. Stock Market  ♠
- Sporting Performances and the Volatility of Listed English Football Clubs 
- Reconsidering the impact of national soccer results on the FTSE 100 
- Scoring on the stock exchange? The effect of football matches on stock market returns: an event study 
- Soccer, stock returns and fanaticism: Evidence from Turkey 
- Market reaction to sporting results: The case of European listed football clubs 
- Information salience, investor sentiment, and stock returns: The case of British soccer betting  ♠
- South African Equity Market Reaction to the 2010 World Cup Announcement 
- Sports Sentiment and Stock Returns  ♠
- Performance of soccer on the stock market: Evidence from Turkey 
- Frequent news and pure signals: the case of a publicly traded football club 
- Investor–fans? An examination of the performance of publicly traded English Premier League teams 
- Economic impact of national sporting success: evidence from the London stock exchange  ♠
- Estimating the value of the Premier League or the worlds most profitable investment project 
Asymmetric Reactions to Good and Bad News as Market Efficiency: Evidence from Publicly-Traded Soccer Clubs
Authors [Year]: Jason P. Berkowitz and Craig A. Depken, II 
Abstract: Event studies suffer from a number of potential shortcomings, most notable the possibility of the market reacting to an event before it actually occurs. To avoid this problem, this paper investigates how the stock prices of publicly traded English football (soccer) teams respond to the outcomes of soccer matches which provide two clear and simultaneous signals, good news for the winner and bad news for the loser. We first establish a link between on-field performance and a club’s financial performance and then show that the market responds asymmetrically to good news and bad news, punishing losers faster than winners. This last result arises because losing is a stronger predictor of future losing, and lower financial performance, than winning is a predictor of future winning.