nep-spo New Economics Papers
on Sports and Economics
Issue of 2007‒04‒14
one paper chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. Market Impact of International Sporting and Cultural Events By António Miguel Martins; Ana Paula Serra

  1. By: António Miguel Martins (Faculdade de Economia da Universidade do Porto, Portugal); Ana Paula Serra (CEMPRE, Faculdade de Economia da Universidade do Porto, Portugal)
    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 mega-events such as the Olympic Games, the World and the European Football Cups and World Exhibitions. First, we evaluate the abnormal returns of winning bidders at (and around) the announcement date at market and industry-levels. Second, we analyze the determinants of the variation in abnormal returns across events and industries 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. Our initial results suggest that the abnormal returns 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 megaevents is associated with a positive stock 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
    JEL: G14 G31
    Date: 2007–04

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