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Predictable Sports Sentiment and Local Trading
Author(s) -
Akhigbe Aigbe,
Newman Melinda,
Whyte Ann Marie
Publication year - 2016
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12124
Subject(s) - basketball , trading strategy , association (psychology) , financial economics , economics , business , monetary economics , psychology , geography , archaeology , psychotherapist
We examine whether predictable outcomes of the National Basketball Association playoff games can generate increased trading of firms headquartered in the geographic area of the participating teams. We find statistically significant increased trading before games and this effect is more pronounced and persistent for games with more predictable outcomes, for predictable losses more than wins, and for more critical games. We also find that this effect is more pronounced for firms that are more vulnerable to shifts in investor sentiment and we find weak evidence that trading leads to price effects. The results are consistent with the hypothesis that predictable sentiment can drive investor behavior.