Travel Reference
In-Depth Information
F.F. Cheng & B.T.H. Hwa
University Putra Malaysia, Serdang, Malaysia
ABSTRACT: This paper examined the impact of the international sporting events on hosting country's
stock market. A total of 30 international sporting events were used in this study. The events were com-
prised of five major sporting events, namely Summer Olympics Games, Winter Olympics Games, FIFA
World Cup, European Football Championships and Commonwealth Games. This study utilized event
study methodology to analyses and investigate the stock's market reaction towards event announcement
date. The empirical result indicated that there was short term positive effect on announcement date across
all stock markets of event hosting countries except for the FIFA world cup, which may be due to informa-
tion leakage.
Keywords
:
Mega sport event, event study, abnormal returns, stock market reaction
1 INTRODUCTION
through analysis of the movement of hosting coun-
tries' stock market movement. The stock market
index is a barometer of a country's economy and is
commonly believed to reflect the expectations of the
economic outlook. Thus, by observing the trends or
movement of the stock market within a specified
timeframe of the event, it provides some indications
of the impact of hosting the international events.
It is often claimed by economist that hosting
international sporting events can generate eco-
nomic benefits to the hosting country. The empirical
evidence is quite mixed. Although many countries
competed to host international sports events such
as the Olympic Games and the World Cup, the
benefits associated with the successful bided coun-
try hosting the event are uncertain. This study will
examine the impact of an international sporting
event announcement to the behavior or movement
of a hosting country's stock market. Therefore the
research questions are: Does the event announce-
ment date have a statistically significant influence
on their country's stock market? The objectives of
this study are to examine short term impacts of bid
winning country's stock market toward the event
announcement date by the organizer.
The international sporting events are usually per-
ceived to create positive effects on the host coun-
tries' economy. Thus, in recent decades, there has
been an increase in competition among countries
to host international sporting events. It is believed
that by successfully organizing major international
sporting events can bring tremendous tangible
and intangible benefits and values to the hosting
country. Hence, many developing countries such
as South Korea, China, Mexico and South Africa
are entering the bidding competition for major
international sporting events with the intention to
capitalize them as an opportunity to improve city,
state, as well as national economic.
The country hosting international sporting events
involve substantial investment into various sectors
of the economy such as construction, hotels, tele-
communications, hospitality, food and tourism. This
investment will boost up the economy of the host-
ing country. Therefore, the economic impact of the
international sporting events usually receives broad
publicity. However, a full evaluation of this economic
impact is rather difficult, since such an international
sporting event has short term and long term effects,
as well as direct and indirect effects, which compli-
cates the estimation of its costs and benefits.
There is no one simple, direct measure of the
impact of hosting international sporting events to
a national economy. However, there are many indi-
rect measures where the impact may be gauged from
hosting an international sporting event. Among
these impact measures or indicators, the most pop-
ular one is by observing or studying of the impact
2 LITERATURE REVIEW
Numerous works of academic literature empha-
sized how international sporting events have had
significant impacts on the host nation's economic
development. As early as 1995, Humphreys and
Plummer (1992) predicted the short-term and
long-term effects on Atlanta's economy when
Search WWH ::
Custom Search