World Cup: No impact on the stock market

Depending on the outcome of the World Cup, this could be good news for British investors: If the English team is eliminated from the upcoming World Cup sooner or later, this will not have a negative impact on stock market prices. If they win the title, of course, it won't be positive either: "No matter how well or badly the Three Lions play, it won't affect the London stock market," says Prof. Dr. Christian Klein, Professor of Corporate Finance at the University of Kassel. "The same is true for other nations and financial markets. The assumption that match results of national teams also influence share prices via national sentiment is pretty, but wrong."

In a recently published study, Klein and his co-authors Tobias Bauckloh, Bernhard Zwergel and Sebastian Heiden refuted English colleagues who claimed such an influence using their own national team as an example. His research result is part of a dispute that has been going on for years between two camps of scientists who face each other in a similar rivalry on this issue as the selection teams of England and Germany.

Klein checked the results of his English colleagues with two tricks: First, he included the influence of international market developments on the FTSE 100. To do this, he integrated the European index Euro STOXX 50 into the formula. The result: "What initially looked like an effect of victory or defeat in the stadium was often simply a consequence of international market movements," says Klein. Even more striking: Klein and his team compared the results of the English footballers with the development on the French stock index CAC 40. According to this, French investors would also invest money in a jubilant mood during English victories or withdraw money during English defeats.

The Kassel-based economist's findings are in line with his own analyses of tournament and qualifying matches of numerous European teams and their supposed influence on share prices, which Klein and his colleagues presented in 2009. Back then, too, they found no statistical correlation. One explanation: A large part of the trading volume on the stock exchanges now comes from foreign and institutional investors who are not influenced by a single national team.

Link to the study: http://www.sciencedirect.com/science/article/pii/S1544612318301119#sec0001

Press release (2014) with results of the 2009 study: http://www.uni-kassel.de/uni/universitaet/pressekommunikation/neues-vom-campus/meldung/article/wenn-poldi-trifft-laesst-das-die-boerse-kalt.html

Contact:
Prof. Dr. Christian Klein
University of Kassel
Department of Corporate Finance
Tel: + 49 561 804-7565
Email: klein[at]uni-kassel[dot]de

Sebastian Mense
University of Kassel
Communication, Press and Public Relations
Tel.: +49 561 804-1961
Email: presse[at]uni-kassel[dot]de
www.uni-kassel.de