The Impact of Sponsorship Contract Announcements on Stock Price Reaction: Evidence from the Korea Baseball Organization (KBO) Cases
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This study assesses the impact of sponsorship contract announcements on stock prices in the Korea Baseball Organization (KBO) League. We adopt the event study methodology to examine abnormal returns (ARs) and cumulative abnormal returns (CARs) of the five Korean conglomerate companies around the dates in which they announce sponsorships with the KBO teams. The results show that all the sample companies have negative ARs at their sponsorship announcement dates. However, we find that CARs recover these initial negative ARs within a maximum of 13-trading-days, suggesting the potential reversibility in the short-term negative value impact of sponsorship. We argue that the negative stock price reactions of sponsorship could be temporary phenomena, possibly being driven by behavioral biases, such as underreactions to the benefits of sponsorship and overreactions to its costs. Overall, this study contributes to the behavioral finance and marketing literature and suggests practical implications for companies strategically managing market reactions to their sponsorship contracts.
Abstract
This study assesses the impact of sponsorship contract announcements on stock prices in the Korea Baseball Organization (KBO) League. We adopt the event study methodology to examine abnormal returns (ARs) and cumulative abnormal returns (CARs) of the five Korean conglomerate companies around the dates in which they announce sponsorships with the KBO teams. The results show that all the sample companies have negative ARs at their sponsorship announcement dates. However, we find that CARs recover these initial negative ARs within a maximum of 13-trading-days, suggesting the potential reversibility in the short-term negative value impact of sponsorship. We argue that the negative stock price reactions of sponsorship could be temporary phenomena, possibly being driven by behavioral biases, such as underreactions to the benefits of sponsorship and overreactions to its costs. Overall, this study contributes to the behavioral finance and marketing literature and suggests practical implications for companies strategically managing market reactions to their sponsorship contracts.
참고문헌 (54)
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