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The Market’s Matchday: Evaluating Stock reactions to Football Clubs performances in the UEFA Champions League

Kraft de la Saulx, Michel ; Ramoisiaux, Quentin
(2024)

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RAMOISIAUX_56511900_KRAFTDELASAULX_24061900_2024.pdf
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Details

Supervisors
Iania, Leonardo
Faculty
Louvain School of Management
Degree label
Master [120] : ingénieur de gestion, à finalité spécialisée
Abstract
At a time when the literature is focusing increasingly on the behavior of stocks over time, football club shares – thanks to their specific economic models – offer a very interesting opportunity to explore the mechanisms behind share price movements. That is why, for the purpose of this Master thesis, research has been carried out on the impact that match outcomes could have on stock prices exclusively in the UEFA Champions League, differing from other studies in this area focusing mainly on domestic competitions. To do so, four linear regressions – each offering an increasing level of detail on the influence of match outcomes – were run to assess the impact that a win, a loss, and a draw could have on the share prices of the associated football clubs. The results indicated that victories positively impact share prices more than defeats negatively affect them. Fans' deep attachment to their team could explain why defeats often have a less pronounced impact on share prices, as investors might be less inclined to sell even following unpleasant news like defeats. Moreover, draws are surprisingly perceived as even more detrimental than defeats as investors might prefer decisive outcomes. The results also suggested that the further a football club advances in the competition, the greater the impact on stock prices – illustrating the higher stakes involved in UEFA Champions League knockout matches. Finally, while certain elements, such as the significant market reactions following matches and the increasing magnitude of these reactions throughout the competition, align with the expectations of the Efficient Market Hypothesis (EMH), there is a growing belief that fan emotions significantly influence stock price movements after matches – due to an over-reaction after wins and under-reaction after losses – challenging the validity of the EMH.