The effects of football events on club stock prices

Abstract

This dissertation aims to find links between European football club’s stock returns and footballing events, and the goal is to find how large the correlations are, if any exist. If successful, it could aid investors predict stock price movements by giving more importance to the on-pitch performances of European football clubs. OLS Multiple Regression Models are conducted on weekly data of five diverse European football clubs, with a review period of five years. With the idea of heterogeneity in mind, the clubs chosen differ drastically in player quality and level of football competitiveness. The study revolves around football match results, which will be represented by two dummy variables. Other explanatory variables were included to control for other factors which may affect the dependent variable. Evidence would suggest that giving more importance to footballing events is a viable option when predicting share price movements of football clubs. This was especially apparent in the regression model of Juventus Football Club S.p.A., as on average, a win showed a 4.8% increase in weekly returns. One of the apparent conclusions would suggest that further investigation into this subject is warranted, and that with larger sample populations and extra explanatory variables, these results can be improved greatly to a point where it can become a viable investment strategy