Date of Award

Spring 2021

Degree Name

Bachelor of Science (BS)

Advisor(s)

John Shon

Abstract

This study examines the relationship between World Cup soccer match outcomes and stock market performance in the participating countries. The hypothesis was that significant soccer events, which are seemingly economically neutral, could influence stock market returns based on national sentiment influenced by match results. Despite historical suggestions that such emotional events can impact economic behavior, the study finds that World Cup match outcomes do not significantly affect stock market indices, adhering to the principles of the efficient market hypothesis, which asserts that markets are well-informed and price assets correctly, factoring in all available information. The research utilized a rigorous statistical approach, running 104 ordinary least squares regressions to analyze the market reactions to match outcomes, including upsets. The findings indicate a lack of statistically significant impact on stock returns in most cases. Few instances showed any significant correlation, and some of these contradicted the expected hypothesis. For example, countries experiencing unexpected losses or wins did not show the hypothesized negative or positive impact on stock returns, respectively. Ultimately, the study concludes that World Cup soccer results are non-value relevant events from a financial market perspective. This reinforces the efficient market hypothesis, suggesting that major sports events like the World Cup, while culturally significant, do not sway the financial markets in a predictable fashion. This conclusion opens the door for further research into other types of seemingly non-economic events and their potential impacts on financial markets under different conditions.

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