Media Coverage of Mega-Sports Events and Investor Stock Categorization: An Examination of the Olympics
73 Pages Posted: 2 Jul 2016 Last revised: 5 Nov 2019
Date Written: October 28, 2019
We investigate whether media coverage of mega-sports events can have spill-over effects in the stock market. Specifically, we focus on the Olympics and we analyze whether the media attention and hype surrounding the Olympics encourages investors to use the Olympics as a way to classify stocks for investment. We examine two Olympic hosting countries: China (2008) and the UK (2012) and identify stocks that media outlets list as either directly or indirectly involved in the Olympics (Olympic stocks). These stocks come from a broad range of industries and vary considerably in the level and timing of their involvement in the Olympics. We find that in both countries, Olympic stocks exhibit increases in comovement of returns after the announcement of the winning bid and declines in comovements after the games are played. However, Olympic stocks do not have superior financial performance and their fundamentals (earnings and cash flows) do not exhibit strong co-movement over the Olympic time period. This evidence suggests that the changes in return comovement are not driven by underlying fundamentals. Our evidence instead suggests that the combination of media attention and a mega-sports event can lead to transitory and sentiment-driven stock categorization.
Keywords: Mega-sports events, media, Olympics, Olympic stocks, China, UK, Beijing, London, valuation, fundamentals, comovement, investor sentiment, investor recognition, common factor
JEL Classification: G12, G14, M41
Suggested Citation: Suggested Citation