Who Benefitted From the PyeongChang Olympic Announcement? Evidence From the South Korean Stock Market

Abstract

Understanding the market effects of Olympic host announcements is popular in academic research. Contrary to prior studies, announcing PyeongChang as the 2018 host had a positive effect on South Korea's Stock Market, with conservative estimates suggesting a peak of +3.8% during the 15 trading days post announcement (an increase equivalent to $34.962 billion). The degree to which firms benefitted varied by industry and lifecycle stage. Older and lower-growth financial and information technology firms saw larger abnormal returns compared to other firms. These findings suggest that academics and investors pay greater attention to idiosyncratic price adjustments to systematic market shocks.

Effects of the Olympic Announcement and the Actual Event on Property Values: The Case of the 2018 PyeongChang Winter Olympic Games

“…We further estimated the heterogeneous effects of the opening of the KTX station according to housing locations in Gangneung. As shown in column (5), units in a 1 km radius from the KTX station observed an additional 4.6% increase in housing prices, units in a 1 km radius from the Olympic arena observed an additional 5.7% increase in housing prices, and units in a 1 km radius from the Athletes' Village observed an additional 9.2% increase in housing prices.…”

“…Recent efforts to identify the positive economic impacts of MSEs have led to the conclusion that hosting MSEs such as the Olympics bring positive impacts on the price of assets such as stock market and property values during the announcement phase of these events [5,6]. This is assumed to be because as soon as an event such as the Olympic Games is announced, the expectations for the mid-to long-term residential, environmental, and economic development in the host city are reflected in the future values of various Olympics-related companies and the host city.…”

Stock Markets’ Reactions to the Announcement of the Hosts. An Event Study in the Analysis of Large Sporting Events in the Years 1976–2032

“…Information about the organization of a large sporting event evokes positive emotions related to development expectations of local companies as a result of their involvement in the broadly understood preparation process (Bruckner & Pappa, 2015; Langer et al, 2018). Nowadays, the requirements of sports federations regarding the appropriate preparation of sporting events are restrictive and are associated with the provision of not only sports facilities, but also transport, tourism, telecommunications, and security infrastructure (Hayduk, 2022). For this reason, companies representing selected sectors of the economy, such as the construction or tourism sector, can potentially benefit more from the organization of a sporting event than others, i.e., those not participating in the race for large-scale infrastructure projects (Abuzayed, 2013; Dollinger et al, 2010; Hayduk, 2022).…”

“…The event study methodology is most frequently applied to investigate the impact of investors’ reaction to the announcements of large sporting events (Eshghi, 2022; Hayduk, 2022; Ramdas et al, 2015). Event studies emphasize the importance of new information related to a certain event, such as the announcement of a sporting event.…”

“…This finding also appears to be justified given the expensive and resource-intensive nature of submitting a bid. Upon losing a bid to host the Olympic Games, market participants perceive a windfall in future economic activity and thus future value that was nearly within reach, but ultimately had to be priced out of securities After losing a bid to host the Games, market participants see some limitations in future economic activity, that have to be valued out of stocks (Hayduk, 2022).…”