The Impact of Asian Games Announcements on Local Companies Stock Returns

Abstract

Asian games are the largest sports event in Asia. Past literature shows different theories and empirical results about the impact of the announcement of hosting mega sports events on local companies’ stock prices. This study uses an event study approach and is based on three models including the market model, market adjusted returns model, and mean adjusted returns model to find abnormal stock returns. Through observing all three models, I find that there are downward cumulative average abnormal stock returns trends before the announcement date and there are upward cumulative average abnormal returns trends in short term after the announcement date and then keeps relatively stable. Overall, the announcements will have a neutral impact on the stock returns of local companies. The results can provide a reference for cities that want to host Asian Games in the future while also can offer a reference for investors.