Department of Finance and Tax, University of Cape Town, Rondebosch, South Africa
Mohamed, S., Department of Finance and Tax, University of Cape Town, Rondebosch, South Africa; Oettlé, T., Department of Finance and Tax, University of Cape Town, Rondebosch, South Africa; Stewart, S., Department of Finance and Tax, University of Cape Town, Rondebosch, South Africa
The success of mega-sporting events such as the Summer Olympics and the FIFA World Cup brings pride and a focus to their host nations. This paper aims to find the effects of the announcement and the actual event on the host stock market. It then recommends an investment strategy. The paper finds that the announcement of the Olympics and World Cup creates statistically significant abnormal returns and the actual sporting event has little effect on the stock market. By factoring size of the economy, it is found that smaller economies tend to have larger abnormal returns than bigger economies. We then provide recommendation on investment strategies in order to exploit the significant abnormal return on the day of the World Cup announcement. © 2015, Virtus Interpress. All rights reserved.