The role of professional football as a trigger of irrational investor behavior in capital markets

Details

Supervisors

Iania, Leonardo

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

The purpose of this thesis was to extend the empirical knowledge about investors’ irrational behavior, and to do so by putting professional sports and football at the center of my research. During the first phase of this work, I reviewed literature that showed evidence of instances where investors may behave against the economic rationality principle and where investor sentiment may be the driver of behavior. My objective, therefore, was to observe this behavior in an empiric case. I proceeded to retrieve data of professional football matches in the 2012-2022 period from nine different traded clubs and six different national leagues. I hypothesized that several variables related to these matches could have an effect on investor behavior and, ultimately, be translated into stock price fluctuation. In my research, I defined several independent variables that I hypothesized could be statistically significant: the result of the match, the day of the week where the match took place, the location where the match was held, the singularity of the match and the national league of the teams. For the statistical analysis, I defined a multiple regression model based on the results of similar studies from authors reviewed in the theoretical block of this thesis. My results showed that in some instances wins and losses could have a positive and negative effect respectively on stock prices.