2007/08/01 by Alex Edmans, Diego Garcı́a, Øyvind Norli · 1 voice · 3 citations
Economics, Econometrics and Finance · #Financial Markets and Investment Strategies #Market Dynamics and Volatility #Financial Risk and Volatility Modeling
paper · doi:10.1111/j.1540-6261.2007.01262.x
openalex publication_date 2007/08/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
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.