The Effects of Hosting Mega Sporting Events on Local Stock Markets and Sustainable Growth

We examine the economic effects of the Summer and Winter Olympic Games and the FIFA World Cup on the economies of host countries. We found that in the short run, hosting the Olympic Games has a significant positive announcement effect on the host country's equity market. Our results also revealed a positive effect on the stock market in non-G7 countries hosting a mega sporting event and an insignificant effect in G7 countries hosting such events, indicating that hosting a mega sporting event can provide additional momentum for developing or emerging economies. We did find, however, that while the countries hosting the Summer Olympic Games initially experienced significant positive GDP growth, the effect rapidly diminished after the event. Our results suggest that hosting a mega sporting event such as the Summer Olympic Games is most likely to result in a short-term positive economic momentum, however it hinders sustainable growth for the host countries' economies.

Automated summary

This article examines the economic effects of hosting the Summer and Winter Olympic Games and the FIFA World Cup on host countries. The study finds that hosting the Olympic Games has a significant positive announcement effect on the host country's stock market in the short run. Additionally, non-G7 countries hosting mega sporting events experience a positive effect on their stock markets, while G7 countries do not, suggesting that hosting such events can provide additional momentum for developing economies. However, the study also shows that the initial positive GDP growth experienced by countries hosting the Summer Olympic Games rapidly diminishes after the event, indicating that hosting mega sporting events may hinder sustainable economic growth.