The Olympic Games - Investor Mood and its Effect on the Stock Market

Abstract: In this paper, we study the Olympic Games and the outcome of the events from a behavioral perspective. As a proxy for investors' mood, a gold medal is used in order to show the impact on investors' trading behavior caused by a positive sport event. The dataset consists of 242 gold medals from eight Olympic Games between the years 1998 to 2014. For the individual tests on events where more than one gold medal won on the same day or gold medals won two days in a row, we cannot find significant support that gold medals affect investors' mood and thus their trading behavior on the stock market. However, on a weak statistical significance level, after adjusting for extreme outliers, the results when including all gold medal events indicate that gold medals have a positive impact on investors' mood, with a lagging effect of two days.