Soccer and the Stock Market

The key to being a graduate student in finance is to compare any variable you can think of to the stock market. Since the World Cup starts tomorrow, I thought I’d show you results of a Dartmouth study comparing soccer matches to a nation’s stock market:

Stock markets move with soccer scores because they have a “decisive impact” on the mood of a nation, according to a study by Dartmouth College.
Match results may “have an important effect” on share prices, Professor Diego Garcia said, commenting on a report released by Tuck School of Business at Dartmouth this week. “There are forces influencing our economies that have little to do with rational thought.”
Stock markets decline 0.39 percent on average after the national team loses in a World Cup game and 0.29 percent in any international match, according to the study, co-written by Massachusetts Institute of Technology’s Alex Edmans and Norwegian School of Management’s Oyvind Norli.
The correlation is the highest in countries with the biggest public support for soccer such as England, France, Germany, Italy and Spain, the report said. In South American nations, the phenomenon is similar, it said.

Here’s the entire paper.

Posted by on June 8th, 2006 at 7:16 am


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