BUS5ATE: The FIFA World Cup Effect on the Stock Market- Finance assignment

Internal code- MAS3786

Finance Assignment

Numerous studies document an association between stock returns and investor sentiment.1 In a recent study, Edmans, Garc ́ıa, and Norli (EGN) (2007) reveal a strong association between results of soccer games and local stock returns. They investigate 39 stock markets and find an asymmetric effect, where losses have a significant negative effect in the losing countries’ local markets, whereas victories do not have a significant effect. Generally speaking, one cannot economically exploit the local effect because, once the game result is known, it is too late to sell stocks of the losing country, as prices are already lower.

Question-

Part I: Summary: A non-technical and readable summary

Part II: Critical evaluation
The issues you may discuss include (but not limited to)

  • Is this research question important and why?
  • Is the research design sensible? If not, what can be done to improve?
  • Is the basic data analysis done adequately? If not, what can be done?
  • Is the econometric specification appropriate? If not, how can it be improved?
  • Is the econometric methodology used adequate? If not, how can you improve it?
  • Do the authors conduct adequate sensitivity analysis?
  • Do the authors’ conclusions make economic sense and matters economically?

Part III : Replication Exercise
The issues you may discuss include (but not limited to)

  • Data details
  • Basic data analysis
  • Replication results and assessment of your findings

Part IV Further Analysis
Conduct any further analyses of your choice. This is an open-end question where you can take an initiative and explore further the data and model used by the authors.

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