How FIFA world cup leads to lower trading in equity markets…

Michael Ehrmann and David-Jan Jansen of ECB look at the 2010 football world cup and assess its impact on trading in equity markets.

They find that during matches the trading (both in number of transactions and total volumes declines).

Every four years, 32 national soccer teams compete in the World Cup. This tournament, which is organised by the world soccer association FIFA, attracts attention from millions of fans across the globe. During the 2010 edition in South Africa, many matches were played during stock market trading hours. This presents us with a natural experiment to analyze possible fluctuations in investor attention.

The paper presents three key findings. First, we find strong evidence of decreased activity in stock markets during soccer matches at the 2010 World Cup. Trading activity dropped markedly, especially if the national team was one of the competitors. Compared to normal market circumstances, the median number of trades dropped by 45% if the national team was playing, while the volume dropped by around 55%. Second, we show how goals scored by either team led to an even stronger decline in the number of trades and offered quotes. Also, we find that market activity was already significantly below the benchmark right before the match started, and continued to be lower during the 45 minutes after the match had ended. Third, we show that also price formation was affected during the soccer matches, as the evolution of returns on national markets decoupled from those on global markets. 

In the light of this, we conclude that markets were following developments on the soccer pitch rather than in the
trading pit, leading to a changed price formation process.

An interesting event study on investor inattention. In India, am sure trading and other activity dropped during recent world cup victory by India. Though going by recent performances of Indian cricket team,  people are likely to work more in order to avoid getting distracted from the pathetic performance of their team.

3 Responses to “How FIFA world cup leads to lower trading in equity markets…”

  1. freerolls Says:


    […]How FIFA world cup leads to lower trading in equity markets… « Mostly Economics[…]…

  2. soe Says:

    So basically, they are saying that when somebody is watching soccer, then at that same time he is not paying so much attention to trading.

    I wonder how much taxpayers money was wasted on this important research…

  3. Why is research higher status than teaching? « Mostly Economics Says:

    […] gets to read so many papers which are just a waste. See the comment on this paper for […]

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