Evaluating the economic impact of national sporting performance : evidence from the Johannesburg Stock Exchange

Smith, Brendan Kent (2009-12)

Thesis (MBA (Business Management))--University of Stellenbosch, 2009.

Thesis

ENGLISH ABSTRACT: This research report examines stock market reactions to sudden changes in investor mood. The motivation for the study is the large volume of psychology and finance research showing that investor mood is affected by various non-economic or economically-neutral phenomena. Previous research has provided strong evidence of a link between the outcome of international sporting results, particularly soccer, and investor mood. This report 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 13 ½ 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 all sports combined, cricket and soccer. The report concludes that there is some evidence of a relationship between sporting success and stock returns.

AFRIKAANSE OPSOMMING: Hierdie navorsingsverslag ondersoek die reaksie van die aandelebeurs op skielike veranderings in beleggersentiment. Die motivering vir die studie is die aansienlike volume sielkundige en finansiële navorsing wat toon dat beleggersentiment beïnvloed word deur verskeie nie-ekonomiese of ekonomies-neutrale verskynsels. Vorige navorsing het sterk getuienis verskaf van 'n verband tussen die uitkoms van internasionale sportresultate, veral sokker, en beleggersentiment. Hierdie verslag ondersoek die impak van Suid Afrika se nasionale sokker-, rugby- en krieketspanne se prestasies in internasionale wedstryde op opbrengste op die Johannesburg Effektebeurs (JEB). Wedstryduitslae verteenwoordig 'n sentimentsveranderlike met die hipotese dat dit aandeeloprengste sal beïnvloed deur die uitslae se invloed op beleggersentiment. Die onvoorwaardelike gemiddelde oprengs op die JEB All Aandele-index vir 'n 13 ½ jaar periode van September 1995 to Februarie 2009 is vergelyk met die gemiddelde oprengs na oorwinings, nederlae en gelykopuitslae van die drie nasionale spanne. 'n Gebeurtenisstudie-benadering is gevolg en vier verskillende statistiese toetse is uitgevoer om te toets vir 'n verband. Die resultate van die toetse dui op die bestaan van 'n matige oorwiningseffek met gemiddelde oprengste na oorwinnings wat statisties wesenlik hoër is vir alle sportsoorte gekombineerd, krieket en sokker. Die verslag kom tot die gevolgtrekking dat daar wel getuienis is van 'n verband tussen sportsuksesse en aandeeloprengste.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/941
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