Skip to main content
SpringerLink
Log in

Assessing the Economic Worth of Corporate Event Sponsorships: A Stock Market Perspective

  • Published:
Journal of Market-Focused Management

Abstract

Sponsorships of events represent a significant and growingcomponent of firms‘ overall investment in marketing and promotions.While the marketing literature suggests that sponsorships maybe a potential communications tool, relatively little empiricalresearch has been devoted to studying efficiency issues in sponsorships.To understand if sponsorships are efficient investments, we assesstheir economic worth via the event study methodology. Specifically,we hypothesize that a corporate sponsorship announcement providesinformation to market analysts who evaluate the potential profitabilityof a firm. This evaluation of a company‘s potential profitability,in turn, affects the firm‘s stock price. Announcements of 76sponsorship events were analyzed using the event-study method.Results indicate that on average, corporate sponsorship announcementsimpact the stock market positively and that sponsorships areviewed as worthwhile investments by the financial community.The findings of this study contribute to a better understandingof performance issues surrounding sponsorship investments, andextend recent literature which examines the financial impactof marketing decisions.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Aaker, David A. (1991). Managing Brand Equity: Capitalizing on the Value of a Brand Name, New York: Free Press.

    Google Scholar 

  • Abratt, Russell, Brian C. Clayton, and Leyland F. Pitt (1987). "Corporate Objectives in Sports Sponsorship," International Journal of Advertising, 6, pp. 299–311.

    Google Scholar 

  • Agarwal, Jagdish, and Wagner A. Kamakura (1995). "The Economic Worth of Celebrity Endorsers: An Event Study Analysis," Journal of Marketing, 59, July, pp. 56–62.

  • AGB Intromart (1986). Sport on Television and Sports Sponsorship, New Media Department.

  • Bacigalupo, Natasha (1996). "Rings of Lead," Forbes, August 12, p. 129.

  • Berry, Leonard L. (1995). "Relationship Marketing of Services—Growing Interest, Emerging Perspectives," Journal of the Academy of Marketing Science, 23(4), pp. 236–245.

    Google Scholar 

  • Bettman, J. R. (1979). An Information Processing Theory of Consumer Choice, Menlo Park, CA: Addison-Wesley.

    Google Scholar 

  • Boulding, K. (1956). The Image, Ann Arbor, MI: University of Michigan Press.

    Google Scholar 

  • Brown, S. J., and J. B. Warner (1985). "Using Daily Stock Returns," Journal of Financial Economics, 14(1), pp. 3–31.

    Google Scholar 

  • Burke, Raymond R., and Thomas K. Srull (1988). "Competitive Interference and Consumer Memory for Advertising," Journal of Consumer Research, 15, June, pp. 55–68.

  • Busby, R., and G. Waterman (1989). "Marketing Guide: 13, Sponsorship," Marketing, pp. 31–34.

  • Chaney, Paul K., Timothy M. Devinney, and Russell S. Winer (1991). "The Impact of New Product Introductions on the Market Value of Firms," Journal of Business, 64, October, pp. 573–610.

  • Clymer, Adam (1986). "How Americans Rate Big Business," The New York Times Magazine, June 8.

  • Cornwell, T. Bettina (1995). "Sponsorship-Linked Marketing Development," Sport Marketing Quarterly, 4(4), pp. 13–24.

    Google Scholar 

  • Crimmins, James, and Martin Horn (1996). "Sponsorship: From Management Ego Trip to Marketing Success," Journal of Advertising Research, July/August, pp. 11–21.

  • Crowley, M. (1989). "The Evolution and Exploitation of Sponsorship," Unpublished MBS thesis, University College Dublin.

    Google Scholar 

  • Dinmore, P. (1980). "Cricket Sponsorship," The Business Graduate(UK), Autumn, pp. 68–72.

  • Dunn, B. (1992). "Speeding into Sponsorship," The Montreal Gazette, pp. C10–C11.

  • Fama, E. F., L. Fisher, M. Jensen, and R. Roll (1969). "The Adjustment of Stock Prices to New Information," International Economic Review, 10(1), pp. 1–21.

    Google Scholar 

  • Fama, Eugene F. (1970). "Efficient Capital Markets," Journal of Finance, 25, pp. 283–417.

    Google Scholar 

  • Fama, Eugene F. (1980). "Agency Problems and the Theory of the Firm," Journal of Political Economy, 88(21), pp. 288–307.

    Google Scholar 

  • Fama, Eugene F. (1991). "Efficient Capital Markets: II," Journal of Finance, XLVI, December, pp. 1575–1617.

  • Fisher, Anne B. (1986). "Spiffing Up the Corporate Image," Fortune, July 21.

  • Gardner, Meryl P., and Philip J. Schuman (1987). "Sponsorship: An Important Component of the Promotions Mix," Journal of Advertising, 16(1), pp. 11–17.

    Google Scholar 

  • Gardner, Meryl P., and Philip Schuman (1988). "Sponsorships and Small Businesses," Journal of Small Business Management, October, pp. 44–52.

  • George, William R. (1977). "The Retailing of Services: A Challenging Future," Journal of Retailing, 53, Fall, pp. 85–98.

    Google Scholar 

  • Global Media Commission (1988). Sponsorship: Its Role and Effects, New York: The International Advertising Association, September.

    Google Scholar 

  • Gottlier, M. (1986). "Cashing in On a Higher Cause," The New York Times, July 6.

  • Gronstedt, Anders, and Esther Thornson (1996). "Five Approaches to Organize An Integrated Marketing Communications Strategy," Journal of Advertising Research, March/April, pp. 48–58.

  • Ha, Louisa (1996). "Observations: Advertising Clutter in Consumer Magazines: Dimensions and Effects," Journal of Advertising Research, July/August, pp. 76–84.

  • Horsky, Dan, and Patrick Swyngedouw (1987). "Does it Pay to Change Your Company’s Name? A Stock Market Perspective," Marketing Science, 6(4), pp. 320–325.

    Google Scholar 

  • IEG Sponsorship Report (1993). "1994 Sponsorship Spending Will Exceed $4 billion," pp. 1–2.

  • ISL Marketing Ltd. (1988). Sponsorship: Has the New Medium Come of Age?, ISL, Lucerne, December.

    Google Scholar 

  • Javalgi, Rajsekhar G., Mark B. Traylor, Andrew C. Gross, and Edward Lampman (1994). "Awareness of Sponsorship and Corporate Image: An Empirical Investigation," Journal of Advertising, 23(4), pp. 47–58.

    Google Scholar 

  • Keller, Kevin Lane (1991). "Memory and Evaluation Effects in Competitive Advertising Environments," Journal of Consumer Research, 17, March, pp. 463–476.

    Google Scholar 

  • Klein, Benjamin, and Keith B. Leffler (1981). "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, 89(4), pp. 615–641.

    Google Scholar 

  • Lainson, Suzanne (1993). "Effective Event Marketing," MediaWeek, September 27, p. 14.

  • Lane, Vicki, and Robert Jacobson (1995). "Stock Market Reactions to Brand Extension Announcements: The Effect of Brand Attitude and Familiarity," Journal of Marketing, 59, January, pp. 63–77.

    Google Scholar 

  • Levin, Gary (1993). "Sponsors Put Pressure on for Accountability," Advertising Age, June 21, pp. S–1 and S-4.

  • MacKinlay, A. Craig (1997). "Event Studies in Economics and Finance," Journal of Economic Literature, 35(1), March, pp. 13–39.

    Google Scholar 

  • Mandese, Joe (1991). "Rival Spots Cluttering TV," Advertising Age, November 18, p. 6.

  • Marshall, D. W., and G. Cook (1992). "The Corporate (Sports) Sponsor," International Journal of Advertising, 11, pp. 307–324.

    Google Scholar 

  • Mathur, Lynette Knowles, and Ike Mathur (1995). "The Effect of Advertising Slogan Changes on the Market Values of Firms," Journal of Advertising Research, 35(1), pp. 59–65.

    Google Scholar 

  • McCarthy, Michael J. (1991). "Keeping Careful Score on Sports Tie-Ins," Wall Street Journal, April 24, pp. B1 and B8.

  • McCarville, Ronald E., and Robert P. Copeland (1994). "Understanding Sport Sponsorship Through Exchange Theory," Journal of Sport Management, 8, pp. 102–114.

    Google Scholar 

  • Meenaghan, Tony (1983). "Commercial Sponsorship," European Journal of Marketing, 17(7), pp. 5–73.

    Google Scholar 

  • Meenaghan, Tony (1991). "Sponsorship-Legitimizing the Medium," European Journal of Marketing, 25(11), pp. 5–10.

    Google Scholar 

  • Meenaghan, Tony (1991a). "The Role of Sponsorship in the Marketing Communications Mix," International Journal of Advertising, 10, pp. 35–47.

    Google Scholar 

  • Meenaghan, Tony (1994). "Point of View: Ambush Marketing: Immoral or Imaginative Practice?," Journal of Advertising Research, July/August, pp. 77–88.

  • Meenaghan, Tony (1996). "Ambush Marketing—A Threat to Corporate Sponsorship," Sloan Management Review, 38(1), pp. 103–113.

    Google Scholar 

  • Nayyar, Praveen R. (1995). "Stock Market Reactions to Customer Service Changes," Strategic Management Journal, 16, pp. 39–53.

    Google Scholar 

  • Normann, R. (1984). Service Management: Strategy and Leadership in Service Businesses, New York: John Wiley and Sons.

    Google Scholar 

  • Otker, T., and P. Hayes (1987). "Judging the Efficiency of Sponsorship," European Research, 15(4), pp. 53–58.

    Google Scholar 

  • Parker, Ken (1991). "Sponsorship: The Research Contribution," European Journal of Marketing, 25(11), pp. 22–30.

    Google Scholar 

  • Peters, Thomas J., and R. H. Waterman, Jr. (1982). In Search of Excellence: Lessons from America’s Best Run Companies, New York: Simon and Schuster.

    Google Scholar 

  • Rethans, A. J., and T. W. Leigh (1985). "Cognitive Scripts: An Approach to the Development of Propositions Concerning Industrial Buying Behavior," in R. E. Spekman and D. T. Wilson (Eds.), A Strategic Approach to Business Marketing(pp. 124–132), Chicago: American Marketing Association.

    Google Scholar 

  • Samson, Roger (1987). "Sponsoring a Major Event has Long-Term Benefits," Sales and Marketing Management in Canada, 28(10), pp. 10–11.

    Google Scholar 

  • Sandler, Dennis, and David Shani (1989). "Olympic Sponsorship versus ‘Ambush Marketing’; Who gets the Gold?," Journal of Advertising Research, 29, August/September, pp. 9–14.

    Google Scholar 

  • Schultz, Don E. (1996). "The Inevitability of Integrated Communications," Journal of Business Research, 37, pp. 139–146.

    Google Scholar 

  • Scott, D. R., and Hazel T. Suchard (1992). "Motivations for Australian Expenditure on Sponsorship—An Analysis," International Journal of Advertising, 11, pp. 325–332.

    Google Scholar 

  • Shani, David, and Dennis Sandler (1996). "Climbing the Sports Event Pyramid," Marketing News, August 26, p. 6.

  • Shoebridge, Neil (1995). "Selling Sponsorships an Olympian Task," Business Review Weekly, 17(22), pp. 76–79.

    Google Scholar 

  • Speed, Richard, and Peter Thompson (1997). "Developing a Model of the Determinants of Sponsorship Impact," Proceedings of the 26th EMAC Conference, Warwick Business School, Vol. 4, pp. 2065–2074.

    Google Scholar 

  • Speed, Richard, and Peter Thompson (1997a). "Determinants of Sports Sponsorship Impact," Working Paper, Melbourne Business School, Carlton: Victoria.

    Google Scholar 

  • Special Events Report (1991). "How Ambush Proof is Olympic Sponsorship?," Event Sponsorship and Lifestyle Marketing, 10(8), p. 1.

    Google Scholar 

  • SRI (1994). Sponsorship Research International, Annual Estimates of Sponsorship Expenditure, London.

  • Stewart, David W. (1996). "Market-Back Approach to the Design of Integrated Communications Programs: A Change in Paradigm and a Focus on Determinants of Success," Journal of Business Research, 37, pp. 147–153.

    Google Scholar 

  • Stewart, David W., Gary Frazier, and Ingrid Martin (1994). "A Modest Call for Rethinking Assumptions," in Marketing Communications Strategies Today and Tomorrow: Integration, Allocation, and Interactive Technologies, Corrie Faure and Lisa Klein (Eds.), Marketing Science Institute, Cambridge, MA, pp. 33–34.

    Google Scholar 

  • Stipp, Horst, and Nicholas P. Schiavone (1996). "Modeling the Impact of Olympic Sponsorship on Corporate Image," Journal of Advertising Research, July/August, pp. 22–28.

  • Thwaites, Des (1995). "Professional Football Sponsorship—Profitable or Profligate?," International Journal of Advertising, 14, pp. 149–163.

    Google Scholar 

  • Varadarajan, P. Rajan, and Anil Menon (1988). "Cause-Related Marketing: A Coalignment of Marketing Strategy and Corporate Philanthropy," Journal of Marketing, 52, July, pp. 58–74.

  • Webster, Frederick E. (1981). "Top Management’s Concerns About Marketing Issues for the 1980’s," Journal of Marketing, 45, Summer, pp. 9–16.

    Google Scholar 

  • Wind, Yoram, and Robert Thomas (1994). "Segmenting Industrial Markets," in Advances in Business Marketing, Arch Woodside (Ed.), Vol. 7, Greenwich, CT: JAI Press.

    Google Scholar 

  • Witcher, Barry, J., Gordon Craigen, Dennis Culligan, and Andrew Harvey (1991). "The Links Between Objectives and Functions in Organizational Sponsorship," International Journal of Advertising, 10, pp. 13–33.

    Google Scholar 

  • Workman, John P., Jr. (1993). "Marketing’s Limited Role in NewProduct Development in One Computer Systems Firm," Journal of Marketing Research, 30, November, pp. 405–421.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Management, State University of New York, Binghamton, NY, 13902-6015

    Debi Prasad Mishra

  2. School of Management, State University of New York, Binghamton, NY, 13902-6015

    George S. Bobinski Jr.

  3. Faculty of Commerce and Administration, Concordia University, Montreal, Quebec, H3G 1M8, Canada

    Harjeet S. Bhabra

Authors
  1. Debi Prasad Mishra
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. George S. Bobinski Jr.
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Harjeet S. Bhabra
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Mishra, D.P., Bobinski Jr., G.S. & Bhabra, H.S. Assessing the Economic Worth of Corporate Event Sponsorships: A Stock Market Perspective. Journal of Market-Focused Management 2, 149–169 (1997). https://doi.org/10.1023/A:1009731419345

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1009731419345

Search

Navigation