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Investor Sentiment and Sectoral Stock Returns: Evidence from World Cup Games

Author

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  • CURATOLA, Giuliano
  • DONADELLI, Michael
  • KIZYS, Renatas
  • RIEDEL, Max
Abstract
It is well known that investor sentiment affects aggregate stock returns. We investigate the economic link between sport sentiment and US sectoral stock returns. We find that sport sentiment affects only the financial sector. We argue that this result might be explained by the high liquidity that makes the financial sector more attractive to foreign investors who in turn are more prone to sport sentiment than local investors in the US. Accordingly, an arbitrageur can build a profitable trading strategy by selling short the financial sector during the FIFA World cup periods and buying it back afterwards.

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  • CURATOLA, Giuliano & DONADELLI, Michael & KIZYS, Renatas & RIEDEL, Max, 2016. "Investor Sentiment and Sectoral Stock Returns: Evidence from World Cup Games," Finance Research Letters, Elsevier, vol. 17(C), pages 267-274.
    • Handle: RePEc:eee:finlet:v:17:y:2016:i:c:p:267-274
    DOI: 10.1016/j.frl.2016.03.023
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    More about this item

    Keywords

    Investor sentiment; soccer results; asset prices; market efficiency;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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