The paper is an essay that will base its discussion on a case study titled “sports sentiment and stock returns. The article particularly will first have a summary of the case study on the first part and later give critiques of the study especially by giving the strengths and weakness of the study.
Part one summary
The case study in broader perspective tries as much as possible to look into the stock market reaction to changes in the investor’s mood. The study which was carried out in approximately 39 countries globally shows that losses in international soccer matches have statistical and economical negative impact on the losing country’s stock market. From the case study, the researchers also articulate that soccer results have been demonstrated to have some effects on the moods of the investors but have a less economic impact. The other aspect that also articulates its self in the case study is that much effect of soccer loss is more pronounced in the countries where soccer is of much significance as compared to other activities that boost the economy. Lastly, from the case study, the researchers also found that the small stocks majorly realize the effect of soccer loss. For the case of small stocks, it has been concluded that it is very sensitive to investor sentiments and held by local investors whose moods are affected by the results of the national team. Therefore, they get the better part of the effects. From the case study, we, therefore, get to understand the aspect of investor’s mood and stock returns which the case study has explicitly shown that moods can have a large effect on the stock returns of a particularly country.
Part two critique
From the case study, it is of great concern to note that to a broader perspective the research was fully equipped in that it was undertaken in almost 39 countries globally. From the case study, therefore, the findings are of great importance since the area covered in the study is more adequate for the research which stands as the strengths of the study. On the other hand, the weakness realized from the case study is that it was channeled on the aspect of sports in that it did not put into consideration the other aspects that can also lead to an impact on stock returns of the respective country.
From the case study, we get much from the aspect of market relation to the investor’s mood in a broader dimension. It is also of much significance since it enlightens the reader in that one comes to understand the effect investors’ mood has on the stock return especially the small stocks as articulated in the article
Edmonds, A., & Garcia, D. (2016). Sports sentiment and sports return.