Abstract
This article investigated the stock price reaction to the news of South Africa’s winning the opportunity to host the 1995 Rugby World Cup, 2003 Cricket World Cup, and 2010 FIFA World Cup, as well as Morocco’s concurrently losing a competitive bid to host the 2010 FIFA World Cup. We used Event Study Methodology, and EGARCH models. In Event Study, the normal market performance is evaluated using 250 daily stock returns in the pre-event period, while abnormal returns are tested within a 41-day (-20, +20) event window. The test was replicated using 2 227 daily compounded stock returns for the EGARCH model to retest the stock market reaction to the news of hosting the 2010 FIFA World Cup for bid winner (South Africa) and bid loser (Morocco). On aggregate, based on both the Event Study and EGARCH models, our findings convey a consistent message that the stock market responded positively to the hosting of mega-sport events for the bid winner (South Africa), and reacted negatively to the bid loser (Morocco). The results are statistically significant at conventional test levels. The findings support policy decisions that welcome mega-sport events.