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

See all articles by Patricia Dechow

Patricia Dechow

USC Marshall School of Business

Alastair Lawrence

London Business School

Mei Luo

Tsinghua University - School of Economics & Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 28, 2019

Abstract

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

Dechow, Patricia and Lawrence, Alastair and Luo, Mei, Media Coverage of Mega-Sports Events and Investor Stock Categorization: An Examination of the Olympics (October 28, 2019). 27th Annual Conference on Financial Economics and Accounting Paper. Available at SSRN: https://ssrn.com/abstract=2803396 or http://dx.doi.org/10.2139/ssrn.2803396

Patricia Dechow

USC Marshall School of Business ( email )

Los Angeles, CA 90089-0441
United States

Alastair Lawrence (Contact Author)

London Business School ( email )

Regent's Park
London
United Kingdom

HOME PAGE: http://Www.alastairlawrence.net

Mei Luo

Tsinghua University - School of Economics & Management ( email )

Weilun Building 201B
School of Economics and Management
Beijing, Beijing 100084
China
8610-62773185 (Phone)

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