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The economic impact of the Olympic Games: evidence from stock markets

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  • Christian David Dick
  • Qingwei Wang

Abstract

By means of an event study of stock market reactions to the announcement of the Olympic Games host cities, we find a significant and positive announcement effect of hosting the Summer Games, with a cumulative abnormal return of about 2% within a few days. Yet, we find no significant results for the Winter Games and for losers. Our results differ from those of Mirman and Sharma (2008), who found that the Winter Games have a significantly negative announcement impact, whereas there is no effect for the Summer Games. Our results rely on a larger sample of 15 Olympic events and are obtained by assessing the abnormal returns after the announcement against a 'business-as-usual' situation (instead of testing the difference between winners and losers). Our findings are in line with economic intuition: the Summer Games represent a larger event and are thus more likely to make a significant impact. We also find that among the winners, small economies tend to exhibit greater cumulative abnormal returns than their larger peers.

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  • Christian David Dick & Qingwei Wang, 2010. "The economic impact of the Olympic Games: evidence from stock markets," Applied Economics Letters, Taylor & Francis Journals, vol. 17(9), pages 861-864.
    • Handle: RePEc:taf:apeclt:v:17:y:2010:i:9:p:861-864
    DOI: 10.1080/13504850802552291
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    1. António Martins & Ana Serra, 2011. "Market impact of international sporting and cultural events," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 35(4), pages 382-416, October.
    2. Gabrielle Berman & Robert Brooks & Sinclair Davidson, 2000. "The Sydney Olympic Games announcement and Australian stock market reaction," Applied Economics Letters, Taylor & Francis Journals, vol. 7(12), pages 781-784.
    3. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    4. Nikolaos Veraros & Evangelia Kasimati & Peter Dawson, 2004. "The 2004 Olympic Games announcement and its effect on the Athens and Milan stock exchanges," Applied Economics Letters, Taylor & Francis Journals, vol. 11(12), pages 749-753.
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    Cited by:

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    More about this item

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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