The purchasing of naming rights for sports stadiums : a harbinger of bad corporate governance or just bad timing?
conference contribution
posted on 2003-01-01, 00:00authored byE Maberly, R Pierce, O Vornik
The literature on corporate governance and the market’s delayed reaction to news events proliferated over the last two decades. This paper examines return patterns surrounding the event date for firms purchasing naming rights for North American sports stadiums. One argument appearing in the financial press is that such acquisitions are a harbinger of widespread corporate mismanagement and hubris at the highest levels of corporate governance. Purchases of stadium naming rights provide sidebenefits to executives such as “being in the limelight” and the use of supplementary corporate boxes. Thus, management has a strong incentive to undertake such investments even if their decision is not value enhancing to shareholders. The extent to which these agreements are associated with negative risk-adjusted returns is an empirical question, which this study addresses. On average, negative riskadjusted returns are observed over the three years following the event date, and these results are significant at standard levels of significance. The efficient market hypothesis suggests that these results are not due to a cause and effect relationship but represent data snooping or just bad timing.
History
Event
New Zealand Finance Colloquium (7th : 2003 : Palmerston North, New Zealand)
Pagination
1 - 34
Publisher
Massey University
Location
Palmerston North, New Zealand
Place of publication
[Palmerston North, N. Z.]
Start date
2003-02-07
End date
2003-02-08
ISSN
1175-8074
Language
eng
Publication classification
E1.1 Full written paper - refereed
Title of proceedings
Proceedings of the 7th New Zealand Finance Colloquium 2003