The relationship between major-league sports’ official sponsorship announcements and the stock prices of sponsoring firms

This study presents analysis of the impact of “official product” sports sponsorships with the National Football League (NFL), Major League Baseball (MLB), the National Hockey League (NHL), the National Basketball Association (NBA), and the Professional Golfers Association (PGA) on the stock prices of sponsoring firms. The primary finding of the study is that, in the main, announcements were accompanied by increases in shareholder wealth. The 53 sponsors analyzed experienced mean increases in stock valuations of about $257 million. A multiple regression analysis of firm-specific stock price changes and selected corporate and sponsorship attributes indicates that official product sponsorships with the NBA, NHL, and PGA and those with smaller market shares were associated with the largest gains in share prices. Although corporate cashflow (a proxy for agency conflicts) is statistically unrelated to shareholder approval, sponsorships by high-technology companies were associated with stronger stock price reactions than otherwise. Finally, product congruence with the sponsored sport was positively related to changes in stock prices. T. Bettina Cornwell (b.cornwell@business.uq.edu.au) is Professor of Marketing and Leader of the Marketing cluster in the UQ Business School at the University of Queensland, Australia. She was formerly Professor of Marketing in the Fogelman College of Business and Economics at the University of Memphis. She received her Ph.D. from the University of Texas. Her research focuses on promotion and consumer behavior, especially with regard to international and public policy issues. Other articles on the topic of sponsorship-linked marketing have recently appeared in theJournal of Advertising, the Journal of Advertising Research, theJournal of Business Research, andPsychology & Marketing. Stephen W. Pruitt (pruittst@umkc.edu) is the holder of the Arvin Gottlieb/Missouri Endowed Chair of Business Economics and Finance in the Henry W. Bloch School of Business and Public Administration at the University of Missouri-Kansas City. He received his Ph.D. from Florida State University. He has published more than 45 articles, most of which employ event study methodologies, in journals such as theJournal of Finance, theJournal of Political Economy, Financial Management, theJournal of Public Policy and Marketing, and theJournal of Advertising Research. John M. Clark (clarkj@cba.usm.edu) is an assistant professor of finance at the University of Southern Mississippi. He received his Ph.D. from the University of Alabama. His research interests include options and other derivatives, investments, and the impact of real events upon the stock prices of corporations. His work has appeared in scholarly outlets such as theJournal of Advertising Research, theFinancial Review, and theJournal of Business Ethics.     

The External Funding of Academic Finance Research

We analyze the external funding of academic finance research. We show that funding is uncommon, particularly for U.S.‐based faculty, and is related to predictable attributes of an author's reputational capital. Further, when research is funded we find it is associated with better articles, as measured by publication in the most prestigious journals and the receipt of increased citations over time. Our study has relevance for every stakeholder in the university's research mission in finance.     

Determining the effectiveness of consumer boycotts: A stock price analysis of their impact on corporate targets

This research study employs a time-series methodology in an effort to assess the impact of 21 consumer boycott announcements upon the wealth of stockholders of target firms. A major finding of the study was that consumer boycott announcements were followed by statistically significant decreases in stock prices for the target firms. In addition, the overall market value of the target firms dropped by an average of more than $120 million over the two-month post-announcement period. A series of multiple regression analyses employing dummy variables representing identifiable boycott attributes failed to identify any significant relationships between the level of equity damage inflicted upon the boycott targets and the selected variables. Policy implications of the research findings are drawn for corporate managers as well as boycott leaders.     

Leading,following and sexism in social dance: change of meaning as contained secondary adjustments

By assigning men the role of ‘lead’ and women the role of ‘follow’, social dance can be viewed as a form of serious leisure that appears to perpetuate a system that positions women as subordinate to men. Interviews with 29 women and 10 men who self-identified as social dancers revealed that women used several strategies to create meanings for following that allowed them to achieve parity with men while operating in an explicitly sexist idioculture. Women’s interpretation of following and the relationship between leading and following was as learning a complex set of skills and abilities that allowed them to make an important contribution to the dance. The meanings women applied to following can be understood as contained secondary adjustments. By viewing following as a performance that requires considerable skill, women can expose the idea that the role of follow is subordinate to the lead as a social construction, and, in the process, use being a follow to subvert the expected social organisation.     

The impact of title event sponsorship announcements on shareholder wealth

Title sponsorships are often considered the crown jewels of sports sponsorship programs. Garnering top media coverage, title sponsorships are prized for both generating brand/product awareness and building image for their sponsors. Not surprisingly, the rising cost of title sponsorships has led some managers to question their underlying value. Accordingly, this study presents an analysis of the impact of 114 title sponsorship announcements of professional tennis and golf tournaments (both men’s and women’s), auto racing (NASCAR), and college bowl games on the stock prices of sponsoring firms. Overall, the results of the study suggest that title sponsorships are generally signed at market-clearing prices. Thus, companies undertaking title sponsorships typically receive exactly what they pay for—except in the case of NASCAR races (which show evidence of increases in share prices). Splitting the sample into new and renewing sponsorships generates results which differ dramatically by sport. Finally, a cross-sectional regression finds congruence of sport and sponsor, sponsorship by high tech firms and sponsorships by large firms all correlated with perceived sponsorship success.     

An Empirical Examination of The Nasdaq/CHX Dual-Trading Experiment

We analyze the effects of the SEC's experimental Nasdaq/CHX dual-trading program. The program, which began in 1987 and continues to the present, establishes an experiment in which the costs and benefits of competition between dealer and specialist market structures can be observed directly. Our primary finding is that the program led to significantly reduced mean quoted and percentage spreads for the dual-traded issues. Further, even though the CHX specialists quote lower spreads, they are not able to garner a significant number of trades from Nasdaq.     

Further Evidence on the Firm-Size Relation and Stock Market Responses to Changes in Federal Reserve Margin Levels

The virtually monotonic firm-size/price-reactions observed following changes in U.S. Federal Reserve market margin requirements over the post-1962 period provide dramatic new evidence in support of the hypothesis that changes in margin levels are associated with changes in security return behavior. Variance tests of the 1970 and 1971 margin decreases also produce evidence consistent with this hypothesis.     

An Empirical Reexamination of the Impact of CBOE Option Initiation on the Volatility and Trading Volume of the Underlying Equities: 1973–1986

This study presents an empirical analysis of the impact of Chicago Board Options Exchange (CBOE) option initiation on the price volatility and trading volume of the underlying equities. Virtually every firm with options listed on the CBOE from April 1973 to June 1986 is included in the empirical tests. The results of the tests strongly suggest that option listing leads to decreases in the total (but not systematic) risk of optioned firms. Although total trading volume appears to increase following option listing, securities listed after 1980 show smaller increases in volume than those listed in the early years of option trading.