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New Research Explores Correlation Between Playoffs and Stock Trading

2017-05-31 00:00:00.0

As the Cleveland Cavaliers battle for a shot at another NBA championship, a trio of finance professors consider whether fan euphoria of the NBA playoffs translates to stock investment decisions.

In their article "Predictable Sport Sentiment and Local Trading" in the Summer 2017 volume of Financial Management, to be released on June 2, faculty members Aigbe Akhigbe (left) and Melinda Newman (center), along with their University of Central Florida colleague Ann Marie Whyte, find increased trading in the stocks of firms headquartered in the local regions of the competing teams. The unique contribution of their research is that the authors find the trading to be anticipatory, or occurring before the outcome of the game is known.

Drs. Akhigbe, Newman and Whyte use betting line spread data to gauge the likely game outcome, and show localized stock trading to be most pronounced and persistent for more predictable game outcomes, for predictable losses more than for predictable wins, and for the most critical games in the tournament series. Their work is consistent with the behavioral tendencies of sports fans documented in the academic psychology literature.

Contact Dr. Newman (corresponding author) at