Market Impact of International Sporting and Cultural Events
AbstractThis 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.
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Bibliographic InfoPaper provided by International Association of Sports Economists & North American Association of Sports Economists in its series Working Papers with number 0720.
Length: 80 pages
Date of creation: Jun 2007
Date of revision:
Market efficiency; Event studies; Mega-events;
Find related papers by JEL classification:
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-30 (All new papers)
- NEP-CUL-2007-06-30 (Cultural Economics)
- NEP-RMG-2007-06-30 (Risk Management)
- NEP-SPO-2007-06-30 (Sports & Economics)
- NEP-TUR-2007-06-30 (Tourism Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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