Abstract
Abstract: This paper assesses the influence of hosting major international sporting competitions on the host countries’ stock market performance before and after the announcement of such events. Specifically, this study explores whether stock markets of hosting countries experience cumulative average abnormal return (CAAR) during the aforementioned period. For the purposes of investigation, the study considers announcements of the 18th Asian Games and 30th Southeast Asian Games hosted by Indonesia and the Philippines, respectively. The LQ45 index of the Indonesia Stock Exchange (IDX) and PSEi index of the Philippines Stock Exchange (PSE) were chosen to test the significance of these events. It is found that only PSE experienced a significantly positive CAAR for the event. Findings of this study can make a significant contribution to helping national governments and investors understand the significance of sports to the economies of developing countries and how major sports events can improve stock market efficiency.
Highlights
International sports events or mega-sporting events are the sports competitions where the participants join from many countries
The observed indices data were collected from respected stock exchange websites – the LQ45 index data from Indonesian Stock Exchange (IDX) and the PSEi index data from Philippines Stock Exchange (PSE), which are openly available
This study examines the impact of the 18th Asian Games hosted by Indonesia by using the data of LQ45 index, which consists of all 569 listed stocks on the Indonesian Stock Exchange (IDX)
Summary
International sports events or mega-sporting events are the sports competitions where the participants join from many countries. Major sporting events (such as, the World Football Cup, the European Football Cup, Summer and Winter Olympic Games, and World and Specialized Exhibitions) may have an economic, social and cultural impact on the host country and/or region, as well as contribute to innovations, science and technology (Chanaron, 2014). Nauright (2004) notes that, in the form of new infrastructure and foreign cash contributions, the host country of an international sporting event earns economic benefits. These events bring social benefits to the hosting communities (Tien, Lo, & Lin, 2011) because international tourists can wield a great influence on tournaments that are broadcast globally (Hill, 2000)
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