The market reaction to national football match outcomes An event study of Oslo Stock Exchange

Abstract

In late 2020, an average of every 6th Norwegian watched the qualifying game between Norway and Serbia in the Nations League (Teigen, 2020). We therefore chose the Norwegian national team for our study, as the residents seem to have found a new hope for advancement in these tournaments in recent years. We conduct an event study where we adapt the ordinary least squares method to analyze if, and how, financial markets are affected by football matches played by the Norwegian national team. We analyze the daily returns of the two stock indices from 1983 to 2020 with the purpose of investigating potential abnormal returns after a win, loss or draw by the Norwegian national team. We find that a loss is followed by a negative abnormal return of -0.363%. Draws are also followed by negative abnormal return, although not statistically significant. We also find that only losses provide statistically significant abnormal returns for the entire sample, which provides evidence that the effect of a football match is different for a win and a loss. For our smaller sample of 1990-2000 only wins provide statistically significant abnormal returns of 0.361%, meaning the size of the Norwegian audience is related to the magnitude and significance of the effect of the match on the Oslo Stock Exchange main market index the next day. We conclude that a match played by the Norwegian national team has an effect on the main market index on Oslo Stock Exchange, which is stronger when Norwegian audiences are larger, and different for a win and a loss.