A big night at the movies may lift more than moviegoers’ spirits. A study found that blockbuster movie releases are followed by significantly higher US stock market returns in the following week.
The paper, by Sanghyun Hong of the University of Canterbury in New Zealand and Xiaopeng Wei of the University of Adelaide in Australia, was published online in the Review of Finance on January 30, 2025.
Movies as a mood gauge
Hong and Wei introduce a new mood metric: the release of blockbuster films, drawing on US movie data from Box Office Mojo.
They document a significant positive correlation between blockbuster releases and US market returns in the week after. The pattern held across a range of robustness tests, both in-sample and out-of-sample.
Box office, searches and calmer markets
Two other measures pointed the same way. Changes in weekly box office revenue and increases in internet searches for movie-related terms also lined up with the effect.
Blockbuster releases also predicted lower expected market volatility and lower risk aversion.
The effect was not confined to Wall Street. The positive link between blockbuster releases and subsequent market returns was also evident in international markets.
For the authors, the takeaway is that a weekend at the cinema can serve as a measurable mood signal, one that shows up in the following week’s returns.
Study Details:
- Title: Blockbuster or bust? Silver screen effect and stock returns
- Authors: Sanghyun Hong, Xiaopeng Wei
- Journal: Review of Finance
- Publication Date: January 30, 2025
- DOI: 10.1093/rof/rfaf004