The London 2012 Olympic Games Announcement Effect on London Stock Exchange

Journal of Economic Studies, 40(2), 2013, pp. 203-221

Posted: 14 Mar 2012 Last revised: 15 Jun 2013

See all articles by Dimitrios Asteriou

Dimitrios Asteriou

Hellenic Open University

Aristeidis Samitas

University of the Aegean

Dimitris Kenourgios

National and Kapodistrian University of Athens - Department of Economics

Date Written: March 13, 2012

Abstract

This paper investigates the reaction of the London Stock Exchange to the announcement of the city hosting 2012 Summer Olympic Games. The expectations of the Olympic Games, are the anticipation of massive economic boosts to the host cities. These expectations are presumed to be translated into positive stock price returns. This research examines the London Stock Exchange industrial indices reactions to this announcement in July 2005. In order to evaluate the returns we employ regressions with GARCH and TARCH models that contain the appropriate dummy variables together with Event Study Analysis. The empirical results suggest an overall positive impact of the announcement on the London Stock Exchange, something that is consistent with previous studies in the topic. However, this result is not consistent for all indices while there were some negative effects as well. This can be explained by the fact that soon after the announcement a terrorist attack took place in London that may have affected reversely the general positive feeling in the Stock Market.

Keywords: The London 2012 Olympic Games, London Stock Exchange, GARCH and TARCH models, Event Study Analysis

JEL Classification: C32, G14, G12

Suggested Citation

Asteriou, Dimitrios and Samitas, Aristeidis and Kenourgios, Dimitris, The London 2012 Olympic Games Announcement Effect on London Stock Exchange (March 13, 2012). Journal of Economic Studies, 40(2), 2013, pp. 203-221 , Available at SSRN: https://ssrn.com/abstract=2021054

Dimitrios Asteriou

Hellenic Open University ( email )

Bouboulinas 57-59
Patra, 26222
Greece

Aristeidis Samitas

University of the Aegean ( email )

8 Michalon str.
Chios
Greece

Dimitris Kenourgios (Contact Author)

National and Kapodistrian University of Athens - Department of Economics ( email )

1, Sofokleous Str
Office 521
Athens, 10559
Greece
+30 210 3689449 (Phone)

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