Soccer clubs listed on the London Stock Exchange provide a unique way of testing stock price reactions to different types of news. For each firm, two pieces of information are released on a weekly basis: experts' expectations about game outcomes through the betting odds, and the game outcomes themselves. The stock market reacts strongly to news about game results, generating significant abnormal returns and trading volumes. We find evidence that the abnormal returns for the winning teams do not reflect rational expectations but are high due to overreactions induced by investor sentiment. This is not the case for losing teams. There is no market reaction to the release of new betting information although these betting odds are excellent predictors of the game outcomes. The discrepancy between the strong market reaction to game results and the lack of reaction to betting odds may not only be the result from overreaction to game results but also from the lack of informational content or information salience of the betting information. Therefore, we also examine whether betting information can be used to predict short-run stock returns subsequent to the games. We reach mixed results: we conclude that investors ignore some non-salient public information such as betting odds, and betting information predicts a stock price overreaction to game results which is influenced by investors' mood (especially when the teams are strongly expected to win).

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Recent empirical work suggests a strong connection between the incentives money managers are o®ered and their risk-taking behavior. We develop a general model of delegated portfolio management, with the feature that the agent can control the riskiness of the portfolio. This represents a departure from the existing literature on agency theory in that moral hazard is not only e®ort exertion but also risk taking behavior. The moral hazard problem with risk taking involves an incentive-compatibility constraint on risk, which we characterize. We distinguish between one period and several periods. In the former case, we derive conditions for the existence of a¯rst-best contract. In the latter, we show that there exists no¯rst-best contract and we use a numerical approximation to study the properties of the second-best contract.

This paper compares the success of venture capital investments in the United States and in Europe by analyzing individual venture-backed companies and the value generated within the stage …nancing process. We document that US venture capitalists generate signi…cantly more value with their investments than their European counterparts. We …nd di¤erences in contracting behavior, such as staging frequency and syndication, and evidence that they help to explain the observed performance gap and we report a substantial unexplained residual. We …nd that US venture funds investing in Europe do not perform better their European peers. European Common Law and Civil Law countries exhibit comparable levels of venture performance, and di¤erences in stock market development or tax subsidies in favor of venture investments are unrelated to performance di¤erences. European IPO exits from venture investments yield returns similar to the US, while trade sale exits weakly underperform. We attribute the overall performance gap essentially to the segment of poorly performing companies.

In many countries, the collective sale of television rights by sports leagues has been challenged by the antitrust authorities. In several cases, however, the leagues won in court, on the ground that sport is not a standard good. In this paper, we investigate the conditions under which the sale of television rights collectively by sports leagues, rather than individually by teams, is preferred from a social welfare point of view. We find that collective sale is socially preferable when (a) leagues are small and relatively homogeneous in terms of clout and (b) teams get little performance‐related revenues. (JEL: L10, L83)