The Winner Takes It All: Investor Sentiment and the Eurovision Song Contest

Abstract

This paper investigates the stock market reaction to a change in investor mood following the Eurovision Song Contest—an annual international song competition and one of the most-watched non-sporting events globally. Contrary to existing literature on international competitions, we find a positive swing in investor sentiment in the winning country. This elevated atmosphere is reflected in a positive abnormal return of approximately 0.55% on the first trading day after the victory. This positive return is reversed several days later. Further, we do not find any indication of negative sentiment in other participating countries, specifically in countries perceived as the losers of the contest. Finally, we do not find any indication that the positive market reaction reflects economic benefits stemming from a victory. Overall, we conjecture that a competition structure is an important determinant of investor sentiment in stock markets.