Do financial markets price UEFA Champions League competition events?

Abstract

PurposeThis paper investigates the stock market reaction to three different events related to the UEFA Champions League – the announcements of draws, odds and match results. The aim of the paper is to test whether these events are informative for stock market operators, i.e. whether they produce abnormal returns.Design/methodology/approachApplying the event study methodology, the authors investigate the stock market reaction before (at two events: the draw date and on the release of betting odds) and after the matches of 11 listed soccer teams in the period 2003–2019. The authors also conduct OLS regression analyses in order to disentangle the impact of firm specific variables and match characteristics on cumulative abnormal returns.FindingsThis paper finds that match outcomes affect the stock market performance of listed teams, while the announcements of draws and odds do not. More specifically, the market does not consider match outcomes involving wins and ties as informative events, while it penalizes losing teams. Moreover, investor reactions to events related to the UCL competition depend more on match characteristics than on company specific variables.Originality/valueThe study enriches the ongoing debate about the impact of soccer team results on stock market performance in several ways: using the widest time span ever adopted in this area; focusing on UCL, which is the most important soccer competition played by private clubs; disentangling for the first time the effects of draws, odds release and sporting outcome on stock returns of listed soccer clubs.