Stock market reaction to Olympic Games announcement<sup>1</sup>

Mirman, Martin; Sharma, Rajneesh

doi:10.1080/13504850801964349

“…Neither do we detect a significant impact when bidders lose the competition. Our results differ from those of a similar study by Mirman and Sharma (2008), who find that the Winter Games are subject to a significantly negative announcement impact, while the Summer Games are not. Our results, however, rely on a larger sample of 15 Olympic events and are obtained by assessing the observed returns after the announcement against a "business-as-usual" situation (instead of testing the difference between the winner group and the loser group).…”

Section: Nontechnical Summarycontrasting

confidence: 57%

“…We also find that among the winners, small economies tend to have greater cumulative abnormal returns than their large peers. To assess the economic impact of the Olympic Games expected by market participants, Mirman and Sharma (2008) test for the difference between winners and losers. That methodology depends on the chosen group of losers.…”

Section: Nontechnical Summarymentioning

confidence: 99%

The economic impact of the Olympic Games: evidence from stock markets

Dick

¹

,

Wang

²

2010

Applied Economics Letters

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08060.pdf Nontechnical SummaryThe Olympic Games usually involve substantial infrastructure investment and boost tourism to the host country. Therefore, the economic impact of the Olympic Games usually receives broad public alertness. However, a full evaluation of this economic impact is rather difficult, since such a mega event has short term and long term, as well as direct and indirect effects, which complicates the estimation of its costs and benefits.Stock market provides an alternative way of evaluating the economic impact of Olympic Games.The stock market, a barometer of the economy, is commonly believed to reflect the expectations for the economic outlook. Mega sports events are usually perceived to positively affect the host countries' economy. Hence, the announcement of the host city by the International Olympic Committee should result in a positive reaction of the stock market of the country which is awarded the sports event ("winner country") and in a negative one in those of their unsuccessful competitors ("losing countries").This paper studies the stock market reactions to the announcement of the Olympic Games host cities during the last three decades. We find a significant and positive announcement effect of hosting the Summer Games which is reflected in the returns (additional 2 percent cumulated over the following days). We do not find any significant results for the Winter Games. Neither do we detect a significant impact when bidders lose the competition. Our results differ from those of a similar study by Mirman and Sharma (2008), who find that the Winter Games are subject to a significantly negative announcement impact, while the Summer Games are not. Our results, however, rely on a larger sample of 15 Olympic events and are obtained by assessing the observed returns after the announcement against a "business-as-usual" situation (instead of testing the difference between the winner group and the loser group).Our findings are in line with economic intuition, since the Summer Games are larger than the Winter Games and are thus more likely to have a significant impact. We also find that among the winners, small economies tend to have greater cumulative abnormal returns than their large peers. AbstractBy means of an event study of stock market reactions to the announcement of the Olympic Games host cities, we find a significant and positive announcement effec...

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“…Martins and Serra (2007) perform a broad study on mega events, including Olympic Games, to discuss hypotheses about rational and behavioral asset pricing theories. 2 Mirman and Sharma (2008) investigate the stock market impact for the 1996 to 2010 Olympic Games, comparing the stock market reaction of winners and losers around the announcement date. They find that, for the Winter Games announcement, stock markets in winning countries perform significantly worse than in losing countries, while there are insignificant results for the Summer Games.…”

Section: Introductionmentioning

confidence: 99%

“…To assess the economic impact of the Olympic Games expected by market participants, Mirman and Sharma (2008) test for the difference between winners and losers. That methodology depends on the chosen group of losers.…”

Section: Introductionmentioning

confidence: 99%

The Economic Impact of Olympic Games: Evidence from Stock Markets

Dick

¹

,

Wang

²

2008

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08060.pdf Nontechnical SummaryThe Olympic Games usually involve substantial infrastructure investment and boost tourism to the host country. Therefore, the economic impact of the Olympic Games usually receives broad public alertness. However, a full evaluation of this economic impact is rather difficult, since such a mega event has short term and long term, as well as direct and indirect effects, which complicates the estimation of its costs and benefits.Stock market provides an alternative way of evaluating the economic impact of Olympic Games.The stock market, a barometer of the economy, is commonly believed to reflect the expectations for the economic outlook. Mega sports events are usually perceived to positively affect the host countries' economy. Hence, the announcement of the host city by the International Olympic Committee should result in a positive reaction of the stock market of the country which is awarded the sports event ("winner country") and in a negative one in those of their unsuccessful competitors ("losing countries").This paper studies the stock market reactions to the announcement of the Olympic Games host cities during the last three decades. We find a significant and positive announcement effect of hosting the Summer Games which is reflected in the returns (additional 2 percent cumulated over the following days). We do not find any significant results for the Winter Games. Neither do we detect a significant impact when bidders lose the competition. Our results differ from those of a similar study by Mirman and Sharma (2008), who find that the Winter Games are subject to a significantly negative announcement impact, while the Summer Games are not. Our results, however, rely on a larger sample of 15 Olympic events and are obtained by assessing the observed returns after the announcement against a "business-as-usual" situation (instead of testing the difference between the winner group and the loser group).Our findings are in line with economic intuition, since the Summer Games are larger than the Winter Games and are thus more likely to have a significant impact. We also find that among the winners, small economies tend to have greater cumulative abnormal returns than their large peers. AbstractBy means of an event study of stock market reactions to the announcement of the Olympic Games host cities, we find a significant and positive announcement effec...

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“…On the other hand, Boyle and Walter (2003) argued that no significant effect was found in the stock market in New Zealand following the losses experienced by the national Rugby team. Olympic Games were used to study the reaction of stock markets to the host city announcement by the Olympic Committee (Veravos et al 2004;Dick and Wang 2010;Mirman and Sharma 2010;Berman et al 2000). These articles used the event study methodology in questioning the reaction of stock markets to the announcements of Olympic Games host cities.…”

Section: Literature Reviewmentioning

confidence: 99%

Untitled

2017

JPES

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Abstract:It is believed that sports and financial performances are linked to each other. Football clubs with weak financial performance are generally in bad positions in terms of sports success. On the other hand, there are only a limited number of football clubs which are in good financial standing without achieving serious sports success. After the increasing number of financial distress reports coming from various European football clubs and the concern about the role of external funds providers, the UEFA decided to increase its controlling power over the football industry and introduced a new set of rules known as the "financial fair play" in 2009. The purpose of this study is to analyze the financial performance of 22 football clubs listed on various European stock markets with the TOPSIS method, and to compare the results with the UEFA club rankings with the Spearman's rank correlation method. Ten financial ratios are used to obtain the ranking of these football clubs with the TOPSIS method. The Spearman's correlation coefficient is calculated as 0.17 and the test result do not indicate a statistically significant relation between sports success and financial performance.

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Stock market reaction to Olympic Games announcement¹

Cited by 17 publications

References 4 publications

The economic impact of the Olympic Games: evidence from stock markets

The economic impact of the Olympic Games: evidence from stock markets

The Economic Impact of Olympic Games: Evidence from Stock Markets

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Stock market reaction to Olympic Games announcement1

Cited by 17 publications

References 4 publications

The economic impact of the Olympic Games: evidence from stock markets

The economic impact of the Olympic Games: evidence from stock markets

The Economic Impact of Olympic Games: Evidence from Stock Markets

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Stock market reaction to Olympic Games announcement¹