The Effects of World Cup 2014 Defeat and Other MBA News Snippets

World Cup 2014 defeats lead to stock market underperformance

Bowing out in the football (soccer) spectacle that has been World Cup 2014 brings about more than a mere loss in a nation’s sporting pride.

It also leads to an immediate stock market underperformance by a country’s national index the day after its defeat, according to an analysis carried out by Alex Edmans, finance professor at London Business School (on leave from Wharton).

“The efficient markets hypothesis argues that stock prices depend only on fundamentals. That would be true if traders were robots. But, traders are human beings and they're affected by emotions,” said Edmans.

This means we saw reigning champions coming into this year’s World Cup, Spain, suffering a 1% fall compared to the 0.1% gain enjoyed by the world market the day after being summarily dispatched 5-1 by the Netherlands.

Negative performance in comparison to the wider global market was more pronounced in countries commonly associated with ‘football fever’ – such as England and Italy – but across the 37 World Cup 2014 defeats analyzed, Edmans found underperformance followed in 25 cases, by an average of 0.2% when held up against the main world market index, the MSCI.

…and could even topple a government?

Brazil’s devastating 7-1 loss to Germany in the semi-finals, however, flagged up an interesting exception, with the World Cup 2014 hosts rallying the next day on the stock market.

Some view this as disproving Edman’s analysis, but Edmans instead suggests that the sheer scale of the defeat was, “so bad that investors think it significantly increases the chances that socialist President Dilma Rousseff will be ousted in October's elections and be replaced by Aecio Neves, the leader of the more pro-business PSDB party.”

Germany meanwhile, newly crowned as World Cup 2014 champions, could be set for a stock market surge – if the general trend of victors found by a Goldman Sachs report is followed. Its report looking at World Cup effects on the stock market since 1974 holds that winning nations outperform the global market by as much as 3.5% in the first month after lifting the trophy.

> Want to turn your love for soccer into salaried employment? Learn about MBA careers in the football industry.

The view from Chicago Booth’s Hong Kong campus

Chicago Booth has made strides towards its stated aim of a diverse student body by switching its Asia campus from Singapore to Hong Kong.

For the Chicago Booth EMBA program beginning this fall, 86 students from 16 different countries have been admitted, according to Hong Kong daily, The Standard. This is thought to represent a rise of between 5% and 7% in total applications, bringing in a total of HK$103.2 million (c. US$13.3M) in tuition.

“The diversity of students is wide and we have accomplished our goal,” said Chicago Booth’s managing director for Asia, Richard Johnson.

Acquiring closer ties to China has been cited as the decisive reason behind the move. But, while students from mainland China admitted to Chicago Booth’s EMBA program have risen from five to 11 since the move, it is unsurprisingly the growth in HK students that is most notable – with 16 students starting this year, compared to just 3 last year.

However, the school says that the new location also makes it easier for students to attend from other key markets in Asia, such as Japan and South Korea.

Meanwhile, hitting back against Chicago Booth’s ‘defection’, Singaporean business schools talked about their continuing attraction to, and reputation among, MBA students in a recent report for the Singapore Business Review. Singapore is home to three of the top 10 schools in Asia Pacific, according to the latest employer-based rankings in the 2013/14 QS Global 200 Business Schools Report. 

‘Serial dean’, Dipak Jain, heads to Thailand’s Sasin

Bangkok’s Sasin Graduate Institute of Business Administration at Chulalongkorn University will be third business school to be led by Dipak Jain, according to The Financial Times.      

The former dean of Northwestern University’s Kellogg School of Management and INSEAD has signed on to replace Sasin’s only previous dean, Toemsakdi Krishnamra, who also founded the school some 32 years ago.

In his new post, Dipak Jain will compete with the Singapore campus of his former charges at INSEAD in attempting to strengthen Sasin’s foothold in Southeast Asia’s business education market – sure to be a key battleground as ASEAN economies grow stridently.

A professor of marketing, Dipak Jain stepped down as dean two years after his appointment at INSEAD, following a period of ill health in 2013, having led the Kellogg School between 2001 and 2009. Jain joins a very small group of professors who have been appointed dean to three different business schools.