Local sports sentiment and returns of locally headquartered stocks: A firm-level analysis

We undertake a firm-level analysis of the relation between National Football League (NFL) game outcomes and the return patterns of Nasdaq firms headquartered geographically near the NFL teams. We find that a team's loss leads to lower next-day returns for locally headquartered stocks and that this impact increases for a surprising loss or a critical game loss. The negative effects of game losses are stronger for stocks that are more vulnerable to shifts in sports sentiment. Our results suggest that the game outcomes of local sports teams influence investor sentiment, which significantly affects the returns of localized trading stocks.

► We study NFL game outcomes and the returns of Nasdaq firms located near the teams.
► A team’s loss leads to lower next-day returns for locally headquartered stocks.
► The impact of game loss increases for a surprising loss or a critical game loss.
► The game loss effect is stronger for stocks more vulnerable to sentiment shifts.