The Effect of Sponsorship Announcements on Stock Returns of Sponsees
The purpose of this study is to investigate the effect of sponsorship announcements on the returns of sponsee stocks by using event study methodology. The study sample includes 25 sponsorship announcements of four major sports clubs listed in Borsa Istanbul for the time period 2011–2015. Statistical significance of the abnormal returns, cumulative abnormal returns, average abnormal returns, and cumulative abnormal returns are tested by t-test. Mann Whitney U tests were performed to check the differences in abnormal returns based on sponsors’ home countries and form of sponsorship. Regression analyses were employed to identify determinants of abnormal returns. Overall, the results indicated that the effect of sponsorship announcements on stock returns of sponsee differs based on the foreign/local origin of sponsor and form of sponsorship. Abnormal returns of sponsees who have foreign sponsors were higher than those who have domestic sponsors. Besides, cumulative abnormal returns of sponsees were higher when sponsorship was in the form of financial assistance rather than in-kind assistance. Yet some sponsorship announcements did not yield significant abnormal returns. The study provides an empirical example of sponsorship effects on sports club stock performance from an emerging market with a relatively large sports economy.