Sentiment And Sports: Impact Of Olympics On Stock Market

This study examines the impact of sports success on investor sentiment and stock returns. Using the results of Olympic Games between 1968 and 2010, I track the stock indices of 19 of the largest equity markets in the world and find that returns during the Games are positively related to performance over previous years. Interestingly, performance is negatively related to returns in the 2 days that follow the Games, implying that sentiment is short-lived and markets mean revert.In addition, effects of host nation, January effects, trading volume and country risks are proved to be irrelevant with abnormal stock market returns. However, higher returns surrounding Winter Olympics are founded out, which might be explained by temperature effects.Results are robust to changes in measurement of performance and golden medal count.