The impact of sponsorship announcements on shareholder wealth in Australia

Johnston, Margaret A. (2010) The impact of sponsorship announcements on shareholder wealth in Australia. Asia Pacific Journal of Marketing and Logistics, 22 2: 156-178. doi:10.1108/13555851011026926

Author Johnston, Margaret A.
Title The impact of sponsorship announcements on shareholder wealth in Australia
Journal name Asia Pacific Journal of Marketing and Logistics   Check publisher's open access policy
ISSN 1355-5855
Publication date 2010
Sub-type Article (original research)
DOI 10.1108/13555851011026926
Volume 22
Issue 2
Start page 156
End page 178
Total pages 23
Editor Dr Ian Phau
Place of publication Yorks, United Kingdom
Publisher Emerald Group Publishing
Collection year 2011
Language eng
Subject C1
150504 Marketing Measurement
910403 Marketing
Formatted abstract
Purpose – The purpose of this paper is to examine the impact of 51 sponsorship announcements
upon the stock prices of firms sponsoring in Australia. The research examines the broader question
of whether sponsorship has the potential to transcend cultural boundaries and contribute to financial
performance in regional markets.
Design/methodology/approach – The methodology is based on the event study technique which
is applied to the estimation of excess returns that arise in response to announcements of corporate
sponsorship made by leading industrial stocks trading on the Australian Stock Exchange.
Regressions examine whether the cost and duration of sponsorship signal information of importance
to investors regarding the financial prospects of sponsoring firms.
Findings – A small, fleeting positive increase in wealth effects is observed indicating that
economically, sponsorship expenditure in Australia is more or less value neutral. While investors
appear indifferent to sponsorship cost, they value short-term sponsorships of less than two years in
Research limitations/implications – Future research needs to examine the role of associated
variables such as contract size and length, and the type and level of sponsorship investment.
Originality/value – For firms, the study indicates that sponsorship in smaller regional markets
should be valued by investors especially when firms keep the duration of the sponsorship as short.
As stock prices tend to rise briefly following sponsorship announcements, marketers should leverage
sponsorships immediately to gain the attention of investors. For a regional market, short and sharp
sponsorships appear to be the optimal approach.  © Emerald Group Publishing Limited
Keyword Sponsorship
Stock prices
Financial performance
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Faculty of Business, Economics and Law -- Publications
Official 2011 Collection
UQ Business School Publications
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Citation counts: Scopus Citation Count Cited 10 times in Scopus Article | Citations
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Created: Fri, 08 Oct 2010, 11:15:12 EST by Karen Morgan on behalf of UQ Business School