The Economic Impact of Olympic Games: Evidence from Stock Markets
Christian David Dick
Centre for European Economic Research (ZEW)
Cardiff University - Cardiff Business School; Centre for European Economic Research (ZEW)
ZEW - Centre for European Economic Research Discussion Paper No. 08-060
By 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 effect of hosting the Summer Games, with a cumulative abnormal return of about 2% within a few 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 abnormal returns after the announcement against a "business-as-usual" situation (instead of testing the difference between winner group and loser group). Our findings are in line with economic intuition, since the Summer Games represent a larger event 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.
Number of Pages in PDF File: 14
Keywords: Olympic Games, economic impact, event study, stock markets
JEL Classification: L83, G14
Date posted: September 1, 2008
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