Document Type

Article

Publication Date

2014

Abstract

What impact do sport sponsorship announcements have on the share price returns of the sponsoring firms? The purpose of this research is to examine the impact of new, renewal and termination sponsorship announcements on share price returns. The research employed the widely acceptable event study methodology to analyse 118 announcements made by 19 firms over a period of more than 11 years. The mixed findings across all three announcement types point to the lack of consideration given to the sponsorship investment by investors. The findings suggest that, although some firms may position their sponsorships as a contributor towards competitive advantage, the announcements of sport sponsorships are not always taken into account by the market. The discussion of findings also highlights two alternate explanations for our findings, including that investors evaluated sponsorship contracts as achieving market clearing prices, and that the size or importance of sponsorship contracts relative to other investments made by the sponsoring firms was not significant enough to result in investors buying or selling shares. The study concludes with recommendations for managers, as well as suggestions for further research.

Comments

This work is a pre-print version of an article published by Emerald and available at https://doi.org/10.1108/IJSMS-15-04-2014-B003

DOI

10.1108/IJSMS-15-04-2014-B003

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