Abstract
This study examines the impact of South Africa’s national soccer, rugby and cricket teams’ performances in international matches on returns on the Johannesburg Stock Exchange (JSE). Match results constitute a mood proxy variable hypothesised to affect stock returns through its influence on investor mood. The unconditional mean return on the JSE All Share index for a 13½ year period from September 1995 to February 2009 was compared to the mean return after wins, draws and losses by the national sport teams. An event study approach was followed and four different statistical tests were conducted in order to test for a relationship. The results of the tests indicate the existence of a moderate win effect, with mean returns after wins being statistically significantly higher for the categories all sports combined, cricket and soccer.
Highlights
In recent times a number of studies have been conducted internationally in order to ascertain the economic impact of national sporting events
Sport has increasingly become of greater economic relevance, rational investors would not be expected to be influenced by the outcome of a sporting event in terms of its effect on stock prices
An increase or decrease in investor mood states as a result of national sporting performance is hypothesised to reflect in stock prices
Summary
In recent times a number of studies have been conducted internationally in order to ascertain the economic impact of national sporting events. The majority of these studies have attempted to determine whether there is any causal relationship between the performance of national sports teams and stock prices on the local stock exchange. This research report builds on previous studies which have examined the effect of various national sport team performances on local stock exchanges. In order to determine whether a relationship exists between national sports results and daily stock price movements an event study was conducted.
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