Warning Flags on the Race Track: The Global Markets' Verdict on F1 Sponsorship

21 Pages Posted: 11 Sep 2013

See all articles by Joe Cobbs

Joe Cobbs

Northern Kentucky University - College of Business

Mark Groza

Northern Illinois University

Stephen W. Pruitt

University of Missouri at Kansas City - Department of Finance, Information Management, and Strategy

Date Written: 2012

Abstract

By analyzing the global financial markets’ valuation of commercial sponsorships in Formula One (F1) motor racing, this paper advances research in the emerging area of return-on-investment of marketing resources. While previous research indicates U.S. markets approve of similar promotional investments, the results of this international event study (i.e., two-stage regression modeling of stock market returns) demonstrate the market value of firms entering into F1 sponsorships decline upon announcement. The level of investment and nationality congruence of the sponsorship appear to enhance the probability for negative returns in shareholder value.

Keywords: Formula 1, Formula One, sponsorship, event study, motor sports, international marketing, shareholder wealth

Suggested Citation

Cobbs, Joe and Groza, Mark and Pruitt, Stephen W., Warning Flags on the Race Track: The Global Markets' Verdict on F1 Sponsorship (2012). Journal of Advertising Research, 52(1), pp. 74-86, 2012. Available at SSRN: https://ssrn.com/abstract=2322540

Joe Cobbs (Contact Author)

Northern Kentucky University - College of Business ( email )

Highland Heights, KY 41099
United States

Mark Groza

Northern Illinois University ( email )

1425 W. Lincoln Hwy
Dekalb, IL 60115-2828
United States

Stephen W. Pruitt

University of Missouri at Kansas City - Department of Finance, Information Management, and Strategy ( email )

United States

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