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

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.nhhma