Article2004

The NASCAR Phenomenon: Auto Racing Sponsorships and Shareholder Wealth

126 citations0/0 files storedJournal of Advertising Research

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Consumer Behavior in Brand Consumption and Identification Marketing and Advertising Strategies Corporate Finance and Governance

Abstract

ABSTRACT This study presents the first analysis of the impact of NASCAR sponsorship announcements on the stock prices of sponsoring firms. The primary finding of the study--that NASCAR sponsorship announcements were accompanied by the largest increases in shareholder wealth ever recorded in the marketing literature in response to a voluntary marketing program--represents a striking and unambiguous stock market endorsement of the sponsorships. Indeed, the 24 sponsors analyzed in this study experienced mean increases in shareholder wealth of over $300 million dollars, net of all of the costs associated with the sponsorships. A multiple regression analysis of firm-specific stock price changes and select corporate and sponsorship attributes indicates that NASCAR sponsorships with more successful racing teams, corporate (as opposed to product or divisional) sponsorships, and sponsorships with direct ties to the consumer automotive industry are all positively correlated with perceived sponsorship success, while corporate cash flow per share (a well-known proxy for agency conflicts within the firm) is negatively related with shareholder approval.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1985Using daily stock returns 1991The Role of Sponsorship in the Marketing Communications Mix 2001Exploring Managers' Perceptions of the Impact of Sponsorship on Brand Equity 1983Commercial Sponsorship 1999An investigation of match-up effects in sport sponsorship advertising: The implications of consumer advertising schemas 1999Relatedness, Prominence, and Constructive Sponsor Identification 2002Corporate Stadium Sponsorships, Signalling Theory, Agency Conflicts and Shareholder Wealth

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