| 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. |