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Taking sport seriously
Edited by Andy Adcroft and Jon Teckman
Introduction
The football industry has changed significantly over the last two decades. All over Europe, many football clubs have implemented development strategies and made substantial investments to maximize their profits. According to Deloitte Football Money League, in 2007 European football clubs generated revenues of about 3.35 billion Euros. Several of these clubs are now listed on the stock exchange market in order to meet their financing needs. This market of football clubs is regularly followed by both investors and financial analysts leading to the publication of specific stock indexes, for instance the Dow Jones Stoxx Football Index.
Unlike industrial and commercial companies which often publish quarterly financial disclosures that may affect the value of their shares, the market pricing of listed football teams can depend on other types of information, especially their sporting results. Indeed, as specified by [14] Renneboog and Vanbrabant (2002), the ownership structure of these teams often consists of a principal shareholder (a blockholder), some institutional investors (football funds), and a large number of individual investors, mainly supporters. When this is the case, the market pricing of these listed teams may depend on (in addition to the economic rationality of investors) the regard of "emotional" supporters holding shares of their teams. It is this perspective that this paper addresses. Its purpose is to study the impact of sporting results on the stock market valuation of European listed football teams.
The empirical analysis leads to several interesting results. In particular, it shows that the sporting results of listed football clubs affect both the stock abnormal returns and the trading volume around the dates of matches. The movement (positive or negative) and the time when the impact occurs (before or after the match) differ according to the nature of the result (defeat, draw or win) and the match venue (home or away).
So far as we know, this paper is one of the first to take into consideration the nature of the sporting results according to the match venue in order to study the market reaction in terms of both stock abnormal returns and trading volume. Unlike certain previous studies, it is not limited to studying a single specific context but considers football clubs...