The stocks of American companies headquartered near the home fields or courts of pro sports teams that are doing well outperform those of companies whose local teams are faring poorly, with the difference amounting to about 30 basis points per month, say Christos Pantzalis of the University of South Florida and Jung Chul Park of Auburn University.

Investors’ tendency to invest in local stocks has been well documented, and the research shows that the behavior of this local base of investors is affected by the results of nearby NFL, NHL, MLB and NBA teams. The effect is so strong that the researchers were able to use it to devise an investment strategy that, in theory at least, would generate abnormal returns ranging from 0.08pc to 0.13pc per week.

(Source: Journal of Economic Behaviour & Organisation)

Published in Dawn, Economic & Business, February 2nd, 2015

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