Analyzing Abnormal Returns: Impact of Unexpected Game Results on Main Sponsors of the European Soccer Leagues

Abstract

Sports exert a profound influence on individuals' lives, social connections, and notably, investor sentiment. An unexpected sports result can have a huge impact on the mood of the people in the city or even an entire country. Different studies have found a relationship between sports teams, locally associated businesses, and unexpected results. However, limited studies have looked at how the primary sponsor of a team is impacted by an unexpected result. Therefore, the main question of this study is as follows: “Do unexpected results in soccer matches result in abnormal returns for the primary sponsor of the team?’’. To facilitate the main question above, this research will utilize two hypotheses. Hypothesis (1) is that an unexpected win/loss creates abnormal returns for the primary sponsor and (2) this is further strengthened when the market contains either Bullish or Bearish sentiment. This research found evidence to support the first claim that sports and unexpected losses lead to abnormal returns. However, this paper also finds that unexpected wins could lead to negative abnormal returns, this may be caused by insufficient sponsoring strategies. This paper found little to no evidence to support the second hypothesis. Concluding, that unexpected losses or wins have a significantly greater impact than mere sporting performance.