Sport sponsorships announcements and stock returns: the case of social sponsorships

Companies invest heavily in sporting activities; however, stock market responses to such investments remain mixed. This study explores how sport sponsorships announcements impact stock returns and whether social sponsorships generate higher stock returns than commercial sponsorships for sport sponsorships. This study employs event study methodology to investigate investors’ immediate response to sport sponsorship announcements. By examining 223 sports sponsorship announcements, the findings indicate a positive stock market response to sports sponsorship announcements estimated at 0.81% uplift in the stock price of the announcing firm. Furthermore, social sponsorships, such as sponsoring the Special Olympics, generate more positive stock returns than commercial sponsorships, emphasising the importance of social sponsorship. Finally, the availability of slack resources decreases the positive returns of social sponsorships, while the sponsor marketing intensity enhances the positive returns of social sponsorships. These results highlight the importance of considering various sponsorship opportunities to maximise stock returns.