Market Impact of International Sporting and Cultural Events

António Martins and Ana Paula Serra ()
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António Martins: Faculdade de Economia da Universidade do Porto

No 720, Working Papers from International Association of Sports Economists, North American Association of Sports Economists

Abstract: This paper investigates the impact of international sporting and cultural events on national stock markets. We study market reaction to the announcements of the selected country hosting the Summer and Winter Olympic Games, the World Football Cup, the European Football Cup and World and Specialized Exhibitions. We also measure the market effects of the announcement of the nomination of the European Cultural City. First, we evaluate the abnormal returns of winning bidders at (and around) the announcement date using an event study methodology. We study the impact at market and industry-levels. Second, we analyze the determinants of the variation in abnormal returns across events and industries on the basis of a set of variables found important by previous studies and control for the prior probability of observing the event. Third, on the basis of a simple model of partial anticipation, we reexamine the abnormal returns observed for the winning and losing countries and perform a series of tests to disentangle the different theoretical arguments that could account for the observed stock market behavior. Our initial results suggest that the abnormal returns measured at the announcement date and around the event are not consistently different from zero. Further, when we look at particular industries, we find no evidence supporting that industries, that a priori were more likely to extract direct benefits from the event, observe positive significant effects. Yet when we control for the prior expectations, the announcement of these mega-events is associated with a positive market reaction in the nominated country and a negative reaction in the losing country. Overall we interpret our findings as supportive of rational asset pricing and partial anticipation.

Keywords: Market efficiency; Event studies; Mega-events (search for similar items in EconPapers)
JEL-codes: G14 G31 L83 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2007-06
New Economics Papers: this item is included in nep-cul, nep-rmg, nep-spo and nep-tur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Market impact of international sporting and cultural events (2011)
Working Paper: Market Impact of International Sporting and Cultural Events (2007)
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