The scale of sports business is rapidly expanding, and attention to sponsorships that link sports and business along with it. According to many prior studies, sponsorships can enhance brand awareness, improve brand image, and increase brand loyalty, by exposing sponsor brands and transferring consumers’ positive perception of the sponsored property to the sponsor’s brand.

However, it is difficult for sponsorships to produce a measurable, quantitative outcome. In the recent years, a growing body of literature uses the event study methodology by estimating stock price reactions to sponsorship announcements. To investigate the effect of sport sponsorship on firm value, a number of researchers so far have investigated how announcements of sponsorship agreements influence stock prices of sponsors. In reality, though, the sponsorship agreement is not an end, but rather a beginning once it is in place. During the contract period, a sponsored athlete carries the name of the sponsor, which spectators see during sport events except for a couple of prior studies (Cornwell et al. 2001; Clark et al. 2002).

This study is in line with these prior studies but attempts to contribute to the related literature in the following two aspects. First, this study employs larger samples than Cornwell et al. (2001) and Clark et al. (2002). The sample of this study includes 170 events of 8 sports. Second, this study complements previous studies by examining Japanese data as Japan does not have a large literature on sport sponsorship. Despite the limited literature on sport sponsorship in the Japanese market, the Asia Pacific region has reported the fastest growing sponsorship spending in the world. In particular, Japan is scheduled to host major sporting events, such as the Rugby World Cup in 2019 and the 2020 Tokyo Olympic Games.

Specifically, the present study examines whether and how sponsored athletes’ participation and performance affect the reaction of a sponsor’s stock price in 170 sport events between 1991 and 2017 using event study methodology. The results show that on average, stock prices react positively to the participation of athletes selected as a country representative in international tournaments, regardless of their performance. Positive market responses increase when the sponsored athletes perform well and when a long-term contract is agreed upon prior to the sporting event. These results indicate that good performance and long-term commitment are likely to strengthen the positive association between sponsors and the sponsored athletes.