The Determinants of Stock Prices of European Football Clubs: An Empirical Analysis
International Journal of Economics, Finance and Management Sciences
Volume 8, Issue 5, October 2020, Pages: 168-179
Received: Aug. 4, 2020;
Accepted: Aug. 17, 2020;
Published: Sep. 3, 2020
Views 155 Downloads 130
Giampiero Maci, Department of Economics, University of Foggia, Foggia, Italy
Vincenzo Pacelli, Ionian Department of Law and Economics of the Mediterranean: Society, Environment, Cultures, University of Bari “Aldo Moro”, Bari, Italy
Elisabetta D’Apolito, Department of Economics, University of Foggia, Foggia, Italy
This study investigates the sporting and financial performances impacts of football clubs on stock price dynamics. The sample covers all the European football companies listed on the Stock Exchange over the period 2012-2017. The stock price formation process for listed football companies is investigated through a multiple regression model in which the share price is a function of several variables of listed European football companies, because the authors analyze the impact of both sports and financial and management performance on the share prices of the companies. Panel data fixed effects estimations are employed to mitigate endogeneity concerns and to control for within-firm dynamics. It was found that on market performance: i) positively impacts of sports performance; ii) positively impacts of economic performance; iii) positively impacts of asset and revenue diversification. This topic would be of interest to international investors and will push club managers to nurture their own corporate culture, which, in many cases, is still not in keeping with the size or pace of market development. These findings have important implications for investors as well as club managers. The empirical research provides useful implications to direct club managements towards best practices that will help football clubs access capital markets. Indeed, they present an encouragement for the improvement of the competitive results and the economic-financial performances.
The Determinants of Stock Prices of European Football Clubs: An Empirical Analysis, International Journal of Economics, Finance and Management Sciences.
Vol. 8, No. 5,
2020, pp. 168-179.
Allen F. (1990), The Market for Information and the Origin of Financial Intermediation, in «Journal of Financial Intermediation», 1, 1, pp. 3-30.
Barros, C. P. & Leach, S. (2006). Performance evaluation of the English premier football league with data envelopment analysis. Applied Economics, 38, 1149-1458.
Bell, A. R., Brooks, C., Matthews, D. and Sutcliffe, C. (2011) Over the moon or sick as a parrot? The effects of football results on a club's share price. Applied Economics, 44 (26). pp. 3435-3452. ISSN 1466-4283 doi: 10.1080/00036846.2011.577017 Available at http://centaur.reading.ac.uk/20978/
Benkraiem R., Louhichi W. and Marquès P. 2009. Market reaction to sporting results: The case of European listed football clubs, Management Decision 47 (1), p. 100-109.
Berument, H., Ceylan, N. B. & Gozpinar, E. (2006). Performance of soccer on the stock market: evidence from Turkey. The Social Science Journal, 43, 695-699.
Boido, C. & Fasano, A. (2007). Football and mood in Italian stock exchange. The Icfai University Journal of Behavioral Finance, 4, 32-50.
Boscá, J. E., Liern, V., Martínez, A. & Sala, R. (2009). Increasing offensive or defensive efficiency? An analysis of Italian and Spanish football. Omega-The International Journal of Management Science, 37, 63-78.
Campbell T. S.-Kracaw W. A. (1980), Information Production, Market Signalling, and the Theory of Financial Intermediation, in «Journal of Finance», 35, 4, 863-882.
Carmichael, F. Thomas, D. & Ward, R. (2000). Team performance: The case of English premiership football. Managerial and Decision Economics, 21, 31-45.
Chan Y. S.-Thakor A. V. (1987), Collateral and Competitive Equilibria with Moral Hazard and Private Information, in «Journal of Finance», 42, 2, 345-363.
Dawson, P. & Dobson, S. (2002). Managerial efficiency and human capital: An application to English association football. Managerial and Decision Economics, 23, 471-486.
Demir, E., & Rigoni, U. (2017). You lose, I feel better: Rivalry between soccer teams and the impact of schadenfreude on stock market. JSE, 18 (1), 58-76.
Duque, J. & Ferreira, N. A. (2007). Explaining share price performance of football clubs listed on the Euronext Lisbon. Working Paper Series, Retrieved from http://ssrn.com/abstract=675633.
Edmans, A., Garcia, D. & Norli, O. (2007). Sports sentiment and stock returns. The Journal of Finance, 62, 1967-1998.
Fama E. F. (1970), Efficient Capital Market: A Review of Theory and Empirical Work, in «Journal of Finance», 25, 2, pp. 383-417.
Floros C. (2014), Football and Stock Returns: New Evidence, International Conference on Applied Economics (ICOAE) 2014, Procedia Economics and Finance 14 (2014) 201-209.
Gamble, D., J. Bradley, A. McCarren and N. M. Moyna, (2019). Team performance indicators which differentiate between winning and losing in elite Gaelic football. International Journal of Performance Analysis in Sport, 19 (4): 478–490.
Gerrard, B. (2005). A resource-utilization model of organizational efficiency in professional sports teams. Journal of Sport Management, 19, 143-169.
Heij, R., Vermeulen, P. & Teunter, L. (2006). Strategic actions in European soccer: do they matter? The Service Industries Journal, 26, 615-632.
Hino Y., Takeda F. (2019). Market reactions to sport sponsorship announcements: Comparison between sponsors and their rivals, Sport Management Review, Available online 27 February 2019.
Hoehn, T. & Szymanski, S. (1999). The americanization of European football. Economic Policy, 28, 205-240.
Millon M. H.-Thakor A. V. (1985), Moral Hazard and Information Sharing: A Model of Financial Information Gathering Agencies, in «Journal of Finance», 40, 5, 1403-1422.
Morrow S., Robinson L., The FTSE-British Olympic Association Initiative: A resource dependence perspective, Sport Management Review, Volume 16, Issue 4, November 2013, Pages 413-423. https://doi.org/10.1016/j.smr.2013.01.002
Ozawa, T., Cross, J. & Henderson, S. (2004). Market orientation and financial performance of English professional football clubs. Journal of Targeting, Measurement and Analysis for Marketing, 13, 78-90.
Renneboog, L. D. R., & Vanbrabant, P. (2000). Share Price Reactions to Sporty Performances of Soccer Clubs listed on the London Stock Exchange and the AIM. (CentER Discussion Paper; Vol. 2000-19). Tilburg: Finance.
Richardson S., Sloan R., and You H. (2012), What Makes Stock Prices Move? Fundamentals vs. Investor Recognition, in «Financial Analysts Journal», 68, 2.
Roberts T. (2014), When Bigger Is Better: A Critique of the Herfindahl-Hirschman Index’s Use to Evaluate Mergers in Network Industries, in «Pace Law Review», 34, 2.
Samagaio A., Couto E., Caiado J. (2009), Sporting, financial and stock market performance in English football: an empirical analysis of structural relationships, Working Paper.
Szymanski, S. & Kuypers, T. (1999). Winners and Losers: The Business Strategy of Football. London: Viking.
Szymanski, S. (2001). Income inequality, competitive balance and the attractiveness of team sports: some evidence and a natural experiment from English soccer. The Economic Journal, 111, 69-84.
Thompson, R. B., Olsen, C. & Dietrich, J. R. (1987). Attributes of news about firms: an analysis of firm-specific new reported in the Wall Street Journal Index. Journal of Accounting Research, 25, 245-274.
Zuber, R. A., Yiu, P., Lambc, R. P. & Gandar, J. M. (2005). Investor–fans? An examination of the performance of publicly traded English Premier League teams. Applied Financial Economics, 15, 305-313.