The “Large-Firm” Effect? Bettor Preferences and Market Prices in NCAA Football

2013 ◽  
Vol 7 (2) ◽  
pp. 29-41 ◽  
Author(s):  
Rodney Paul ◽  
Andrew P. Weinbach ◽  
Eric Higger
Keyword(s):  
Financial Markets ◽  
Small Firm ◽  
Small Firms ◽  
Random Variable ◽  
College Football ◽  
Market Prices ◽  
Betting Market ◽  
Football Betting ◽  
Firm Effect

Abstract: NCAA football has a clear classification of “large” (AQ) and “small” (non-AQ) conferences.  This setting lends itself to the testing of the “small-firm” effect found in financial markets in the college football betting market.  The “small-firm” effect occurs when small cap firms outperform large cap firms; typically attributed to difficulty and costs in finding information on small firms.  In college football, AQ-teams win more than implied by efficiency against non-AQ teams.  At the same time, AQ teams receive a disproportionate share of bets on these games.  The likely rationale behind these findings is the incentives created by the BCS system which leads the point spread to not be a true random variable within this market.

Team Travel Effects and the College Football Betting Market

2015 ◽  
Vol 18 (4) ◽  
pp. 388-425 ◽  
Author(s):  
B. Jay Coleman
Keyword(s):  
Market Efficiency ◽  
College Football ◽  
Temperature Elevation ◽  
Home Team ◽  
Late Season ◽  
Betting Market ◽  
Time Zones ◽  
Football Betting

This research examines whether the college football betting line and over/under accurately assimilate travel effects on visiting teams, including time zones traversed; direction and distance traveled; and temperature, elevation, and aridity changes. We investigate the market’s accuracy at predicting winners, point differentials, and points scored and examine its market efficiency, that is, whether travel affects the chance the home team covers the spread or the chance that an “over” bet wins. The betting market is found to be an inaccurate and inefficient processor of travel effects, most consistently for late-season games involving an underdog with a 1-hr time deficit versus its opponent.

THE RELATIVE IMPORTANCE OF STRENGTH AND WEIGHT IN PROCESSING NEW INFORMATION IN THE COLLEGE FOOTBALL BETTING MARKET

2012 ◽  
Vol 2 (2) ◽  
pp. 13-28
Author(s):  
Greg Durham ◽  
Mukunthan Santhanakrishnan
Keyword(s):  
San Antonio ◽  
College Football ◽  
Price Formation ◽  
Relative Importance ◽  
State University ◽  
Montana State University ◽  
New Information ◽  
Betting Market ◽  
Football Betting ◽  
Insight Into

Griffin and Tversky (1992) suggest that individuals, when formulating posterior probabilities based on the available evidence, tend to overreact to a new piece of evidence’s strength while underreacting to the relative importance of its weight.  We test this prediction using the college football betting market, a market that is commonly employed in tests for efficiency and rationality.  Using average points in excess of the spread and streak against the spread as measures for strength and weight, respectively, we find that bettors overreact to strength and underreact to weight.  These results are consistent with the predictions of Griffin and Tversky, as well as with the findings of Sorescu and Subrahmanyam (2006) and Barberis, Shleifer, and Vishny (1998) in financial market settings.  Our work also provides insight into how behavioral biases might affect price-formation processes in other markets.The authors thank Tod Perry, Omar Shehryar, and Kumar Venkataraman for their careful feedback and thoughtful suggestions.  The authors are also grateful for comments from seminar participants at the 2008 Midwest Finance Association meetings in San Antonio and 2008 Southwestern Finance Association meetings in Houston, as well as from seminar participants at Montana State University.  (The authors are responsible for any outstanding errors in this paper.)

scholarly journals An investigation into the small firm effect on the Johannesburg Stock Exchange

1986 ◽  
Vol 17 (4) ◽  
pp. 191-195 ◽  
Author(s):  
P. De Villiers ◽  
A. J. Lowings ◽  
T. Pettit ◽  
J. Affleck-Graves
Keyword(s):  
New York ◽  
Small Firm ◽  
Small Firms ◽  
Stock Exchange ◽  
Share Price ◽  
Large Firms ◽  
Investment Performance ◽  
Market Capitalization ◽  
Johannesburg Stock Exchange ◽  
Firm Effect

Recent studies on the New York Stock Exchange have provided empirical evidence which suggests that small market capitalization firms outperform large market capitalization firms in terms of share price performance. This appears valid even after adjusting for the additional risk borne by the small firms. This has become known as the 'small firm effect' and questions the validity of many traditional pricing models such as the Capital Asset Pricing Model. In this paper, the small firm effect is examined on the Johannesburg Stock Exchange. The risk-adjusted performance of portfolios comprising large firms is contrasted with that of small firms. Three measures of size are used, namely market capitalization, asset base and traded volume. In all three cases, no evidence of a small firm effect is apparent. Indeed, if anything, the large firms appear to provide superior investment performance on the JSE.

scholarly journals A Test Of The Differential Information Hypothesis Explaining The Small Firm Effect

2011 ◽  
Vol 13 (1) ◽  
pp. 115 ◽  
Author(s):  
Siva Nathan
Keyword(s):  
Small Firm ◽  
Small Firms ◽  
Theoretical Research ◽  
Differential Information ◽  
Estimation Risk ◽  
Wall Street ◽  
Information Availability ◽  
Information Hypothesis ◽  
The Wall Street Journal ◽  
Firm Effect

<span>Previous research has shown that, on average, small firms earn higher risk-adjusted returns than large firms. So far there has been no satisfactory empirical explanation for this pricing anomaly. Theoretical research has shown that firms for which less information is available should, ceteris paribus, earn higher returns to compensate for estimation risk. Since, on average, less information is available for small firms, this is a possible explanation for the small firm effect. Using the number of articles in the Wall Street Journal as a measure of information availability, I find that the small firm effect can be entirely explained by differential information availability among firms.</span>

In search of the source of informed trader information in the college football betting market

2005 ◽  
Vol 15 (3) ◽  
pp. 143-152 ◽  
Author(s):  
William H. Dare ◽  
John M. Gandar ◽  
Richard A. Zuber * ◽  
Robert M. Pavlik
Keyword(s):  
College Football ◽  
Betting Market ◽  
Football Betting

scholarly journals Getting a Foot in the Door: Small-Firm Credit and Interest Group Politics in the Netherlands, 1900–1927

2020 ◽  
pp. 1-37
Author(s):  
RUBEN PEETERS
Keyword(s):  
Small Firm ◽  
Small Firms ◽  
Power Structures ◽  
Access To Credit ◽  
Financial Infrastructure ◽  
History Of ◽  
Interest Group Politics ◽  
Group Politics ◽  
The Government

This article explores the link between the history of small-firm associations and the development of Dutch financial infrastructure geared toward small firms. In particular, it tests Verdier’s thesis about the origins of state banking using an in-depth case study of the Dutch small-firm movement. This article shows that Dutch small-firm associations did not simply became politically relevant and use their power to lobby for state banking, but rather used the topic of insufficient access to credit to rally support, mobilize members, and obtain subsidies from the government. During this associational process, they had to navigate local contexts and power structures that, in turn, also shaped the financial system. State banking was initially not demanded by small firms, but arose as the result of failed experiments with subsidized banking infrastructure and a changing position of the government on how to intervene in the economy.

DAY-OF-THE-WEEK EFFECT IN US BIOTECHNOLOGY STOCKS — DO POLICY CHANGES AND ECONOMIC CYCLES MATTER?

2016 ◽  
Vol 11 (02) ◽  
pp. 1650008
Author(s):  
SWARN CHATTERJEE ◽  
AMY HUBBLE
Keyword(s):  
Stock Returns ◽  
Small Firm ◽  
Economic Cycles ◽  
Trading Decisions ◽  
Portfolio Managers ◽  
Small Investors ◽  
Garch Processes ◽  
Day Of The Week ◽  
Firm Effect ◽  
Daily Returns

This study examines the presence of the day-of-the-week effect on daily returns of biotechnology stocks over a 16-year period from January 2002 to December 2015. Using daily returns from the NASDAQ Biotechnology Index (NBI), we find that the stock returns were the lowest on Mondays, and compared to the Mondays the stock returns were significantly higher on Wednesdays, Thursdays, and Fridays. The day-of-the-week effect on returns of biotechnology stocks remained significant even after controlling for the Fama–French and Carhart factors. Moreover, the results from using the asymmetric generalized autoregressive conditional heteroskedastic (GARCH) processes reveal that momentum and small-firm effect were positively associated with the market risk-adjusted returns of the biotechnology stocks during this period. The findings of our study suggest that active portfolio managers need to consider the day of the week, momentum, and small-firm effect when making trading decisions for biotechnology stocks. Implications for portfolio managers, small investors, scholars, and policymakers are included.

The Small Firm Effect

1983 ◽  
Vol 39 (3) ◽  
pp. 46-49 ◽  
Author(s):  
Ivan L. Lustig ◽  
Philip A. Leinbach
Keyword(s):  
Small Firm ◽  
Firm Effect
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