Irrationality in Emerging and Developed Markets

The goal of this thesis is to obtain a clearer view on country or market specific characteristics that explain irrational trading behavior induced by sentiment from international soccer matches. Motivated by existing studies that found a link between investor mood and stock returns, this paper provides more insight into the relationship between irrational trading behavior and the development level of the financial markets. The topic is investigated with different methodological approaches. None of the used methods revealed a significant relationship between the level of market development and irrational trading behavior. To put this negative result into perspective, the robustness of previous findings is also investigated at the end of the paper.