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The beautiful game and abnormal returns: the impact of match outcomes and ex-ante expectations on a football club’s stock price : an event study

Frijns, Peter
Master thesis
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URI
https://hdl.handle.net/11250/2681252
Date
2020
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  • Master Thesis [3384]
Abstract
The aim of this study is to examine the stock price reaction of listed football clubs to different types of

match outcomes and the ex-ante expectations about the outcomes. Analysing 8472 matches of 22

European football clubs in the period 2007 – 2019, I report that a win results in a positive cumulative

abnormal return of 0.61% within the first three trading days after a match. A draw and a loss lead to a

negative cumulative abnormal return of -1.07% and -1.92%, respectively. Moreover, for wins and draws

I find strong evidence that ex-ante expectations about match outcomes influence the impact on abnormal

return. An outcome that constitutes a surprise has a stronger impact on abnormal return than an expected

outcome. Highly expected wins are anticipated by investors in advance and do not lead to a significant

stock market reaction, while surprise wins result in a big positive cumulative abnormal return of 3.29%.

Similarly, the negative effect on cumulative abnormal return of draws is -0.74% for medium expected

draws and -1.41% for surprise draws. While the results for losses are not conclusive, there is some weak

evidence that suggests that the negative effect on abnormal return of a loss is stronger the more

surprising a loss is. Furthermore, I find that domestic match outcomes and European match outcomes

do not result in different stock price reactions. Similarly, I report that the effects on abnormal return of

wins, draws and losses in the Champions League are not statistically different from the effects of wins,

draws and losses in the Europa league, respectively. Lastly, I find that winning a final has no impact on

abnormal return, while losing a final leads to a very substantial drop of a football club’s stock price.

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