Scientists have established a link between declined trading activity and winning of medals in Olympic Games.
Researchers at University of East Anglia (UEA) and Nottingham Trent University (NTU) have revealed through their study published in European Journal of Finance that there exists a relation between a country winning a medal in the Olympic Games and a reduced trading activity in the stock market the following day. One of the primary reasons behind this decline in trading activity seems to be the distraction created by the medal win.
According to data collected by researchers for each gold medal that the U.S. athletes won at the Olympic Games there was an almost 3 per cent decline in trading volumes in the S&P 500 firms. Data from Germany and South Korea reveal even higher decline in trading volumes at 6.7 per cent and 7.3 per cent respectively.
Researchers examined whether the stock market impact of the Games and gold medals is due to a shift in the mood of investors or a distraction of their attention.
One of the primary reasons cited by countries when bidding to host Olympic Games is that the games are thought to bring with them well-being, feel-good or happiness benefits for the population. However the latest study isn’t able to confirm this as they have found no significant link between success in Olympic Games and sentiment among investors.
The authors conclude that the Games affect the attention of investors rather than their mood.
The results are based on the analysis of a new dataset of medals over four Summer Olympic Games (Sydney/2000, Athens/2004, Beijing/2008, London/2012) for eight major economies (US, UK, France, Australia, Netherlands, Germany, South Korea, Japan) and five multinational sponsoring firms (Coca Cola, McDonald’s, Panasonic, Visa, Samsung).