Market Impact of International Sporting and Cultural Events
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.
|Date of creation:||Jun 2007|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.cdes.fr/index.php?id=fr69|
More information through EDIRC
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.:
- Robert Baade & Victor Matheson, 2004.
"The Quest for the Cup: Assessing the Economic Impact of the World Cup,"
IASE Conference Papers
0406, International Association of Sports Economists.
- Robert Baade & Victor Matheson, 2004. "The Quest for the Cup: Assessing the Economic Impact of the World Cup," Regional Studies, Taylor & Francis Journals, vol. 38(4), pages 343-354.
- Fama, Eugene F., 1998.
"Market efficiency, long-term returns, and behavioral finance,"
Journal of Financial Economics,
Elsevier, vol. 49(3), pages 283-306, September.
- Eugene F Fama, . "Market Efficiency, Long-Term Returns, and Behavioral Finance," CRSP working papers 448, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Eugene F. Fama, . "Market Efficiency, Long-term Returns, and Behavioral Finance," CRSP working papers 340, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Acharya, Sankarshan, 1993. " Value of Latent Information: Alternative Event Study Methods," Journal of Finance, American Finance Association, vol. 48(1), pages 363-85, March.
- Nikolaos Veraros & Evangelia Kasimati & Peter Dawson, 2004. "The 2004 Olympic Games announcement and its effect on the Athens and Milan stock exchanges," Applied Economics Letters, Taylor & Francis Journals, vol. 11(12), pages 749-753.
- Titman, Sheridan & Wei, K. C. John & Xie, Feixue, 2004.
"Capital Investments and Stock Returns,"
Journal of Financial and Quantitative Analysis,
Cambridge University Press, vol. 39(04), pages 677-700, December.
- Corrado, Charles J., 1989. "A nonparametric test for abnormal security-price performance in event studies," Journal of Financial Economics, Elsevier, vol. 23(2), pages 385-395, August.
- Victor Matheson, 2006.
"Mega-Events: The effect of the world’s biggest sporting events on local, regional, and national economies,"
0610, College of the Holy Cross, Department of Economics.
- Victor Matheson, 2006. "Mega-Events: The effect of the world’s biggest sporting events on local, regional, and national economies," Working Papers 0622, International Association of Sports Economists;North American Association of Sports Economists.
- Aigbe Akhigbe & Jeff Madura & Ann Whyte, 2004. "Partial Anticipation and the Gains to Bank Merger Targets," Journal of Financial Services Research, Springer;Western Finance Association, vol. 26(1), pages 55-71, August.
- Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
- Alex Edmans & Diego García & Øyvind Norli, 2007. "Sports Sentiment and Stock Returns," Journal of Finance, American Finance Association, vol. 62(4), pages 1967-1998, 08.
- Fama, Eugene F, 1991. " Efficient Capital Markets: II," Journal of Finance, American Finance Association, vol. 46(5), pages 1575-617, December.
- Merton, Robert C., 1987.
"A simple model of capital market equilibrium with incomplete information,"
1869-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Merton, Robert C, 1987. " A Simple Model of Capital Market Equilibrium with Incomplete Information," Journal of Finance, American Finance Association, vol. 42(3), pages 483-510, July.
- Blose, Laurence E & Shieh, Joseph C P, 1997. "Tobin's q-Ratio and Market Reaction to Capital Investment Announcements," The Financial Review, Eastern Finance Association, vol. 32(3), pages 449-76, August.
- John J. Siegfried & Andrew Zimbalist, 2000. "The Economics of Sports Facilities and Their Communities," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 95-114, Summer.
- Elroy Dimson & Massoud Mussavian, 1998. "A brief history of market efficiency," European Financial Management, European Financial Management Association, vol. 4(1), pages 91-103.
When requesting a correction, please mention this item's handle: RePEc:spe:wpaper:0720. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson)
If references are entirely missing, you can add them using this form.