Top-flight European football teams and stock returns: market reactions to sporting events

We examine the link between the corporate events of football clubs and the trend of their stock returns using a proprietary database of roughly 2000 events, based on the hypothesis that the repercussions of these occurrences affect the future decisions of investors. We study the stock price performance of 22 European football listed firms from January 2006 to April 2021. These are tied to two distinct events: (a) a coach change and (b) the acquisition of football players. Using the event study approach, we claim that investor emotion drives the stock price reaction to these specific occurrences, contributing to behavioural finance and asset allocation decisions. Our findings reveal that such events have an economic and statistically significant influence on stock prices. Even though there are country-specific peculiarities that might alter market reactions, we can maintain that there is a favourable influence of player transfers on stock performance, which is also produced by positive emotion.