SPORTS SENTIMENTS AND FINANCIAL MARKETS: SHADENFREUDE IN RIVALRY OF INDIA AND PAKISTAN

This paper examines the reaction of sports (International Cricket) outcomes on stock markets of Pakistan and India. Valuation of stock markets is taken in terms of abnormal stock returns around the dates of one day international (ODI) matches. Event study has been employed in this paper for 605 ODI matches played by Pakistan and 660 ODI matches played by India in period of 1990-2019. Findings suggest that on next trading day following the match stock returns are positive after win and negative after losing the game in both countries. In this paper one novel finding is existence of negative abnormal returns one day before matches due to anxiety of fan investors before game starts. Another important aspect of rivalry is examined as two rival countries are taken as sample. Results suggest that fan investors experience schadenfreude as they feel positive when their national team wins or rival team loses and feel bad when their team loses or rival wins. This optimism or pessimism results in abnormal stock returns mentioned in results of this paper.