Abstract: This study examines the impact on the stock prices of the IPL sponsored firms that how

stock prices of these sponsored companies reacts on the win and loss of a match by the IPL team
they are sponsoring and whether there is any effect due to the announcements of the sponsoring
team names or not. Using event study methodology data is analyzed.
Key words: Investor,Sponsors,Stock Prices.
Literature Review:
There are several studies conducted which deal with the effects of sports sponsorship and their
effect on company stock returns, investors perception, and its effect on different matches. Until
early 2000s, the researches were focused only on other sports than football and were analyzing
other dependent variables than stock price returns. This situation changed when the ratio of
revenue from these advertising and sponsorship deals has increased drastically.
Researches carried later were focused mainly on specific games as football, baseball, Olympic
Games etc. Matthias Reiser, Christoph Breuer, and Pamela Wicker research conducted in 2012
focus on effect of sponsorship announcement on firm value. Previous researches conducted focus
on those games which are popular in those particular countries Athens 2004 Olympic Games
(e.g. George S. Spais, & George N. Filis, 2006) National Football League (AssafEisdorfer and
Elizabeth Kohl, April 2015) tennis and golf tournament (John M. Clark & T. Bettina Cornwell &
Stephen W. Pruitt) soccer matches in US (AdrienBouchet, Mike Troilo, Brian Walkup June 4,
2015) and UEFA Champions League games (Alexandra Miroiu 2014). With respect to all these
previous research conducted for different sports, all these researches had used event study
methodology.
Many researches have been done on different sports but no study has been done yet on the Indian
IPL performance.Based on the previous studies some of the reviews are mentioned below.
Main reason behind the concept of event study methodology was to examine whether specific
event has an impact on stock prices by comparing actual result with the expected result (Spais&
Fills, 2008)
Russyl Smith and Vinod Mishra(2010) examined the effect of Indias cricket team on its stock
market and came to the conclusion that there exists strong negative relationship between the
stock prices and losses by the Indian Team. They explained this by explaining about the
optimistic and pessimistic nature of investors. They studied that when Indian Cricket team wins
the game investor feel optimistic and they end up by buying more stocks as they are happy than
they buy in usual days. And also when team losses any match they feel pessimistic and end up by
selling more quantity so that they could not suffer much loss due to fallen prices .But the effect
of later is more and this shows market swings are not symmetric in size. This is the reason the
downward movement in market is more as compared to the upward movement because investors
put more emphasis on loss rather than on win of a match.

Brenden ken smith(2009) in his study evaluated the economic impact of national sporting game
and carried out his research in South Africa . In his study he evaluated the result of various sports
such as Rugby and mens Soccer game and cricket and samples were collected for 13 years and 6
months.Based on various test he performed such as Z-test,T-test and dummy variable regression
he came to the conclusion that result which he got were mixed ie. He found no constant
relationship between the matches and the stock prices.
Saeedmardani (2009) study the result of football game performance in Iran based on 4 teams
which entered in Champions league and whose investors are listed in Tehran Stock Exchange.
Reason for choosing football game is that in Iran people are mostly interested in this game rather
than on any other game. Based on the observations he concluded that there is positive and
consistent relationship between results of the game played and stock price changes and once the
tournament is over there is no much change in the prices and prices of all the companies
fluctuate at same percent.
Title sponsor and image congruence results in positive relation (Mathew Walker et, 2015) They
collectively used the data of those sponsors who were freely traded in New York stock exchange
or American stock Exchange. This study not only emphasized on announcement date stock prices
but also on the event day stock prices in order to measure the effectiveness of title sponsorship.
On the basis of Event study methodology and Annova they concluded that title sponsorship
announcements in the tournament has positive effect on the stock prices.
Not all the research shows that announcements have positive impact on the stock prices of the
company .Some of the researches have concluded that Announcements do not have direct
relationship with the stock prices and also market does not react on the news of announcements
(Oleksii Khvastunov, 2011) .He conducted his study on the football game which is most liked by
people of Europe. His research was based on secondary data .He used the data of 10 years and
carried out research on 26 listed companies. Based on GARCH approach he found that market
could respond to stock prices base on the circumstances.
Some of the research was conducted to see the impact of Olympic Games on the stock prices of
Host country.P.downword et.(2009) carried out research on Olympic games and also known as
mega event (Hall 1992) .Although such events are of short duration but they have large number
of visitors visiting the country and impacting the economic condition of the host country. Based
on the Stock market data from 1988 to 2004 it was concluded that stock returns are affected by
many factors such as political factors, corporate earnings, labor strikes and so on
Olympic Games are also impacted by such factors due to which stocks listed on the stock
exchange of host cities fluctuates depending on such factors. Along with Olympic games study
was done on World cup and PGA tour by Jin-Woo-Kim (2008) to identify whether there is any
relationship between the sports sponsorship and financial performance of sponsored company

and based on event study methodology and data of 4 world cup season and by regression analysis
it was concluded that unexpected brand equity is negatively related with financial performance.
Mathias Reiser, Christoph Breuer, and Pamela Wicker (2012): Their study identifies the
effect of sponsorship announcement on firm value. For their research they took a sample size of
629 from all general sports and for different sub samples which includes soccer, motor sports and
different regions. In their study they found that sports sponsorship has a positive impact on stock
prices whereas share price have not shown any response to soccer sponsorship. Share price
reaction to announcement of sports sponsorship is negatively influenced by the firm size in case
of soccer only. They also said that it has been rejected that share price reaction to sports
sponsorship announcement is significantly higher for the firms from high tech sector than the
other firms.
John M. Clark, T. Bettina Cornwell, Stephen W. Pruitt (2008): Theystudy the impact of 114
title sponsorship announcements of tennis and golf tournaments of both mens and womens
tournament on the stock prices. For their research they used event study methodology and they
find a strong positive relationship between a firm abnormal return and its market value. They did
not found any clarity in this that there is no relationship is found between organizational cash
flow and sponsorship return.
A research was conducted to test which party get most of the benefits from the sponsorship
agreement: the sponsors or the sponsored organization by George S. Spais and George N.
Fillis(2008).
For this research they examine stakeholders reaction to the announcement of the sponsorship
agreement between Fiat S.p.A and Juventus Football Club S.p.A. They test 123 daily stock prices
to study the influence between the stakeholders behavior and announcement of an official sports
sponsorship programme. They found that there is no specific difference in average daily return
and at 10% level of significance there is no specific difference between in the daily variance of
stock in case of Fiat stocks. Whereas in case of Juventus at 10% level of significance there is
significant difference on the average variance of stock 2 month before the announcement and 2
month after the announcement. At 1% level of significance the average return before the
announcement was positive and it was negative after the announcement. At the end they
concluded that investors do not perceive all these programmes in a positive manner.
AdreinBouchet, Mike Troilo, and Brain Walkup: In their research paper they examine the
impact of International Football (Soccer in US parlance) matches on sponsoring firms stock
market returns. For their research they used different event study methods and they collected a
hand collected data of football teams and their corresponding primary sponsors for a sample of
European Football Club. They found that sponsoring firms have abnormal return up to 5.03%
twenty days beyond the sponsored event and 2.23% abnormal returns ten days after the
international match. They got the evidence that high profile football returns get high returns.

In 2014 Alexander Miroiu published a research paper in which he provides evidence for the
relationship between sponsors stock price return and football clubs performance. They used
event study methodology in order to find out the reaction of stock returns of the top 5 English
football teams which were sponsored during the UEFA champions League games in season
2004/2005 to 2012/2013. For sample he used 39 publicly listed companies. He found that all the
victories of football club give positive abnormal return and all the defeats give negative
abnormal return to the sponsors. Also the results do not confirm any stronger effect during the
knockout phase.
A research was conducted in Australia in which impact of 51 sponsorship announcements was
observed upon the stock prices of sponsoring firms in Australia by Margaret A. Jhontson (2009).
He also focused on another question that whether these sponsorship announcements contributes
towards financial performances in regional market and do these sponsorships have that potential
to transcend the cultural boundaries. They found small but positive increase in wealth effects
which indicates that economically, sponsorship expenditure in Australia is more or less value
neutral. Whereas the perception of investors was indifferent to the sponsorship cost.
There are many other researches who have conducted a research on League games as National
Football League. Assaf Esdorfer and Elizabeth Kohl (2015) conducted a research on National
Football League to study that these companies who sponsor National football League (NFL)
stadiums there stock prices there outcomes got influenced by the outcome of important
individuals games played in the stadiums. They collected data on their own for teams with
stadium which were sponsored by publicly traded companies only. They took a sample of 3399
games out of which 1710 were home games of 21 teams with 26 sponsoring teams during the pre
season, post season and regular season over the period of 1997-2013. Their second sample
include games that are more important the post season (playoff) eliminations games which
include 57 home games.
There results reveal that stadium sponsoring companies market value was affected by games
outcome. During post season games these stadiums sponsoring companies have earned more
whereas losing teams have earned average abnormal returns
Another research was conducted to explore the effects of a brand/ sport matchups on the
persuasive influence of certain sponsorship material. They initially collected the data and they
also took a sample of 216 undergraduates (89 males and 127 females) from the colleges of
business and communication (Stephen R.MacDaniel, 1999). In their research they found that
gender is important factors which influence the reaction towards advertising leveraging sports
sponsorship. There finding give a support to the intuitive notion that matching a brand or product
with any of the special event or sport can positively impact sponsorship response within a
particular market segment.

Sazali Abadin, Sarah Alexander, Xun Yu and Azilawati Banchit: There main focus was to
find out that is there any relationship that exist between stock return and sporting results. They
analyzed each sport and each company separately to analyze the behavioral effects of not only a
particular nation but at international level. Their findings depicts that there is no significant
relationship that exist between stock returns and the international spor ting results of two
countries. Same is with the sub periods; means there is also no significant relationship between
the two.
Hanke and kirchler (2013) also researched on the question that whether there is any impact of
football results on the stock market prices of the jersey sponsors. For their research they took
the games of European and world championships of football during years 1996 to 2008. They
found that positive results have been found after the competition where the teams sponsored by
the same jersey had played against each other and teams failure lead to negative returns. This
research paper also focused on the marketing programmes which were part of this sponsorship to
see that how these programmes effect of sponsorship on the company and what were the reasons
because of which these companies prefer to pursue with these programmes. They found that
increased media exposure lead to increase in corporate sales apart from some unique and
different features. This finding was found to be true especially in the case of games which are
watched by large number of viewers from different countries. I the same way we have taken
Cricket game for our research because in India Cricket is the most famous game. Our study is
different from Hanke and Kirchler on this point that we are focusing on the League conducted in
India only on the game which is most famous in India. We are focusing on only one game and in
one country i.e. IPL and at a different sample period.
Renneboog and Vanbrabant (2000) were the first one to do a study on whether these sporting
results have any impact on football share price returns. They analyze the clubs which were listed
on the London Stock Exchange and on Alternative Investment Market. They found that in case of
victories there were positive abnormal returns of approximately 1% and 1.4% and 0.6% in case
of defeats or drawn matches, always on the first day of trading following the match for the clubs
which are listed on London Stock Exchange and Alternative Investment Market.
Like Renneboog another study was conducted for the associations listed on London Stock
Exchange by Ashton, Gerrard and Hudson (2003) in which they find positive relationship in
changes in the share prices and English National Soccer Team performance. The concluded that
in matches where good performance was given by the teams there positive market returns was
found on the market prices whereas where teams have performed bad there negative market
returns were observed.
Several previous studies have given a link that between investors mood and stock returns. Baker
and Wugler (2006) find that future stock returns are based on the investors mood at the
beginning of the period. They found that stocks that are more volatile had lower subsequent
returns when investors mood is higher.

In 2001 Loewenstein, Weber, Hsee and Welch had discussed that how emotional reaction is a risk
factor for the investor. He said that when a investor is making some kind of risky decision, as
trading decision in the stock market at that time there decisions may got influenced by their
feelings. Therefore we cannot say that the decisions taken at that time were rational or optimal
because they might got influenced by various factors
In 2007 Subhramanyam published his research paper in which he worked on the behavioral
finance. He try to find the answer of some questions which can be resolved by the use of
behavioral finance such as investors motivation for trading and portfolio, deviations in stock
prices whose answers cannot be given in an appropriate manner by the use of traditional risk and
return relationship which was suggested by efficient market proponents. Once these aspects are
clear to the investors they would be able to avoid the mistakes at the time of making investment
and they can also take benefits of other investors behavior. One area that has received less
interest in behavioral finance is investors mood. The findings suggest that investors mood do not
get affected by external variables and they are not correlated with the market and do not affect
investors decision. After these researches investors mood or behavioral finance was taken into
consideration as an important part of the study because these researches have proved that stock
market may get influenced due to investors mood.
Another research paper was published in September 2013 by Rim Zouaoui, Faten Hakim
Ghorbel and Mohamed Ali Omri in which these people has conducted a study to test whether
there is any influence on the behavior of the investor due to sports sponsorship. In this research
paper they analyzed the effects on the sponsoring firm Tunisian of African Nations
Championship Handball Games final. They took a sample of al sponsoring deals between 1994
-2012 for the companies listed in Tunisian Stock Market. Findings reveal a positive impact on
the Tunisian firm value performance teams of sports sponsorships. They said that a company
should build good relations with the sports events which are affiliated with the sports sponsored
by the firm.
These previously conducted researches depicted a positive impact on the stock returns of the
sponsored firms (Matthias Reiser, Christoph Breuer, and Pamela Wicker, 2012; George S. Spais,
& George N. Filis, 2006; AssafEisdorfer and Elizabeth Kohl, April 2015) with a few examples of
studies focused on different sports.
In India the most popular sport is Cricket. The effects of Indian Premier League (IPL) results
have been researched from different perspective and several different studies have been taken
into account from different sports which demonstrate that these advertising and sponsoring deals
have positive and economical impact on the stock price returns of the sponsored firm as well as
they affect the investors mood.