Impacts of International Sports Events on the Stock Market: Evidence from the Announcement of the 18th Asian Games and 30th Southeast Asian Games

Dwipraptono Agus Harjito
Md. Mahmudul Alam
and Rani Ayu Kusuma Dewi

This paper assesses the influence of hosting major international sporting competitions on the host countries’ stock market performance before and after the announcement of such events. Specifically, this study explores whether stock markets of hosting countries experience cumulative average abnormal return (CAAR) during the aforementioned period. For the purposes of investigation, the study considers announcements of the 18th Asian Games and 30th Southeast Asian Games hosted by Indonesia and the Philippines, respectively. The LQ45 index of the Indonesia Stock Exchange (IDX) and PSEi index of the Philippines Stock Exchange (PSE) were chosen to test the significance of these events. It is found that only PSE experienced a significantly positive CAAR for the event. Findings of this study can make a significant contribution to helping national governments and investors understand the significance of sports to the economies of developing countries and how major sports events can improve stock market efficiency.

JEL Code: G14, G15