Abstract
This study investigated and compared the share price reactions of home-based sponsor companies, which are situated in developed and developing countries, to sponsoring the FIFA World Cup™. The investigation consisted of analysing the share price reactions of home-based sponsor companies to sponsoring the FIFA World Cup™ in order to determine whether or not the share prices of home-based sponsor companies react efficiently to sponsoring the FIFA World Cup™. In this study, two event dates, namely the sponsorship announcement date and the tournament hosting (start) date, were used to assess the share price reactions of home-based sponsor companies to sponsoring the FIFA World Cup™. An event-study methodology was implemented for this research study whereby the cumulative abnormal returns (CARs) across the two event windows were examined. It was found that share prices react differently to the sponsorship announcement date and the tournament hosting (start) date. Furthermore, the positive and negative share price reactions surrounding both event dates indicate that investors view the sponsoring of the FIFA World Cup™ soccer tournament as either positive (good) news or negative (bad) news. Overall, the share prices of the home-based sponsor companies do not appear to exhibit market efficiency. However, there are certain event windows where share prices appear to be efficient. The test statistics which were all calculated to be statistically insignificant do not support the hypotheses that the sponsorship announcement made by a home-based sponsor company and the hosting (start) of the FIFA World Cup™ soccer tournament are associated with a significant impact on the home-based sponsor company’s share price.
M.Com. (Financial Management)