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A rational asymmetric reaction to news: evidence from English football clubs

Author

Listed:
  • Jason P. Berkowitz

    (St. John’s University)

  • Craig A. Depken

    (University of North Carolina-Charlotte)

Abstract

Using a large dataset of matches played between two publicly traded English football (soccer) clubs, we test for and confirm an asymmetric market reaction to winning and losing and that the stock market respond stronger and slower to bad news (losing) than good news (winning). In contrast to previous studies, we show that financial fundamentals help explain this asymmetry. In particular, club short-term financial performance is negatively impacted by losing but not impacted by winning. Furthermore, losing is a significantly stronger predictor of future match outcomes than winning.

Suggested Citation

  • Jason P. Berkowitz & Craig A. Depken, 2018. "A rational asymmetric reaction to news: evidence from English football clubs," Review of Quantitative Finance and Accounting, Springer, vol. 51(2), pages 347-374, August.
    • Handle: RePEc:kap:rqfnac:v:51:y:2018:i:2:d:10.1007_s11156-017-0673-6
    DOI: 10.1007/s11156-017-0673-6
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    More about this item

    Keywords

    English football (soccer); Good and bad news; Asymmetric reaction;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Z23 - Other Special Topics - - Sports Economics - - - Finance

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