The Stock Market Reaction to the 2020 Tokyo Olympics: Evidence from Japanese Sponsors and Taiwanese Olympic-Related Firms

Abstract

This study aimed to examine the impact of a major sporting event, the 2020 Tokyo Olympics, on abnormal returns of Japanese sponsors and Taiwanese Olympic-related stock prices during three different periods, including the hosting announcement, the postponement in light of the COVID-19 pandemic, and the holding as scheduled. Using the event study approach, secondary data were collected to investigate the fluctuation of abnormal returns of official Japanese sponsors and Taiwanese Olympic-related stocks. The empirical evidence showed that Olympics-related news disclosures significantly affected the abnormal returns of official sponsors’ stock prices during both the periods of the hosting announcement and the postponement announcement but not during the period of holding as scheduled. This study also verified that the postponement announcement of the 2020 Tokyo Olympics and its holding as scheduled would generate positive and negative spillover effects on the stock market of a non-host country.