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A stakeholder approach to international and national sport sponsorship

Article in Journal of Business and Industrial Marketing · October 2011

DOI: 10.1108/08858621111179831

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 A stakeholder approach to international and
national sport sponsorship
Rodoula Tsiotsou
Department of Marketing & Operations Management, University of Macedonia, Thessaloniki, Greece

Abstract
Purpose – Using a stakeholder perspective, this paper aims to investigate the effectiveness of sponsorship as a business investment by assessing the
impact of sponsorship announcements on the shareholders’ reactions of the sponsoring firms. These reactions are examined in two different occasions:
in an international mega sport event such as the Olympic Games and in sport organizations such as sport federations/associations.
Design/methodology/approach – Event study analysis by using multiple regression models and bootstrapping techniques were employed to study
the effects of sponsorship announcements. The sample consisted of sponsors of the 2004 Olympic Games and sponsors of national sport federations.
Findings – Overall, the results of the study did not indicate any significant effects of sponsorship announcements on the stock prices of sponsoring
firms, suggesting that shareholders’ reactions to this business activity are limited.
Originality/value – This is the first research initiative that utilizes a stakeholder approach in examining sponsorship effectiveness. The findings
provide evidence that shareholders do not perceive sport sponsorships as business investments due to limited information provided by the sponsoring
firms. In addition to theoretical and practical implications, the study proposes a new methodological approach in evaluating the impact of sport
sponsorship. Multiple regression models applying bootstrap techniques to avoid data distribution and small sample problems are recommended.

Keywords Stakeholder theory, Shareholders, Sponsorship, Event study analysis

Paper type Research paper

1. Introduction in 1984 to $24 billion in 2001 (International Events Group

Sponsorship Report, 2002). According to International
The intense competitive pressure and media cluttering Events Group (IEG), global sponsorship spending reached
businesses are facing in today’s global market require careful $37 billion in 2007, an 11.5 percent increase over 2006
planning and execution of well-reasoned and effective (International Events Group Sponsorship Report, 2008).
promotional tools. One of these marketing communication However, the above data refers only to the direct costs of
strategies that is growing rapidly and is becoming big business purchasing sponsorship rights. To support, leverage and fully
over the last decades is sponsorship. Sponsorship is a business exploit a sponsorship, businesses spend two to three times
agreement between two companies in order for both parties to more than what they pay for securing the property of
mutually benefit and accomplish their profit and non-profit sponsorship rights (Cooper, 2003) because sponsorship is not
objectives. According to Walliser (2003), sponsorship is a only a communication tool but a commercial investment as
business relationship between a corporation and an well (Walliser, 2003).
individual, event or organization that is based on an The most widely and often used sponsorship is sport
exchange relationship between the sponsor and the sponsorship. Sport sponsorship involves sponsoring sport
sponsored, and where marketing communication objectives associations, events, teams, athletes, and sport facilities. Sport
are pursued through associations. A corporation (the sponsor) sponsorships received 67 percent of corporate sponsorship
provides funds, resources or services and buys rights and spending in North America in 1994 (Ukman, 1995) while the
association with the sponsored firm (Busby, 1997). Ukman majority of sponsorship funds are spent on buying the
(1995) defines sponsorship as “a cash and/or in-kind fee paid sponsorship rights for the “king of sport events”, the Olympic
to a property . . . in return to access to the exploitable Games. Due to the mammoth amounts of money invested,
commercial potential associated with that property” (p. 1). sponsorship effectiveness has become of central importance to
The current size of sponsorship investment as well as its academics and marketing managers.
dynamic growth is substantial over the years. Corporate Different measures have been used to evaluate the impact of
sponsorship expenditure worldwide increased from $2 billion sponsorship. Stock prices of sponsors (Cornwell et al., 2001;
Farrell and Frame, 1997; Miyazaki and Morgan, 2001),
The current issue and full text archive of this journal is available at brand awareness and recall (Johar and Pham, 1999; Quester,
www.emeraldinsight.com/0885-8624.htm 1997), behavioral intentions (Tsiotsou and Alexandris, 2009)
and media coverage are some of the most common variables

Journal of Business & Industrial Marketing

26/8 (2011) 557– 565 Received: 12 April 2009
q Emerald Group Publishing Limited [ISSN 0885-8624] Revised: 12 June 2009
[DOI ] Accepted: 25 July 2010

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 International and national sport sponsorship Journal of Business & Industrial Marketing
Rodoula Tsiotsou Volume 26 · Number 8 · 2011 · 557 –565

used to assess the value of sponsorship. Cooper (2003) used in combination with a bootstrapping technique in order
proposes two principal ways in evaluating sponsorship: reach to relax the limitations of the distribution assumptions
(how many people were exposed to the sponsorship via associated with the standard approach (skewness and
media) and awareness (how many people recall the brand heteroscedasticity of the abnormal returns).
sponsoring an event). However, Johar and Pham (1999) The paper is organized as follow. First, the relevant
reported that sponsor identification is biased toward brand’s literature that provides the theoretical framework of the study
perceived affinity to the event and towards prominent brands. (stakeholder theory) and informed the development of
Various theoretical approaches have been used to test explain hypotheses is reviewed. Then, the method section describes
and test sponsorship effectiveness. Thus, scholars have tested the event study methodology along with the procedures of
Ehrenberg’s Awareness-Trial-Reinforcement model (Hoek data collection. In the following sections, the results are
et al., 1997), the Attitude toward the Advertisement and the presented and discussed with their implications. Finally, the
Attitude toward the Brand models (Bloxham, 1998), and the limitations and future research recommendations conclude
brand-event relatedness and market prominence (Johar and the paper.
Pham, 1999) in order to measure the effectiveness of
sponsorship. In general, research on sponsorship
effectiveness has been focused either on consumers (Miloch 2. Theoretical framework
and Lambrecht, 2006; Gwinner and Swanson, 2003; 2.1 Stakeholder theory and perspectives
Tsiotsou and Alexandris, 2009) or on shareholders reactions Stakeholder theory attracted the interest of scholars in various
(Cornwell et al., 2001; Kinney and Bell, 2003; Miyazaki and fields after the publication of Freedman’s seminal work in
Morgan, 2001; Pruitt et al., 2004). 1984. Freedman (1984) linked stakeholder interests to
However, the studies on shareholders reactions to corporate strategy and supported that an organization’s
sponsorship agreements share several deficiencies: they lack success depends on the needs, motives and goals of the
a sound theoretical framework, they do not justify why they stakeholders with whom the organization interacts.
select the specific group (shareholders) to be studied over Stakeholder theorists suggest that the primary financial and
others (e.g. community or consumers), and they do not social responsibility of a company is to generate positive
explain why they expect reactions from its members. Contrary returns and serve the divergent (and often conflicting)
to these investigations, the present study proposes stakeholder interests of all the stakeholders involved in order to
theory as its theoretical foundation where shareholders maintain profitable relationships with them and be
constitute one of the most important stakeholder groups. successful in the long-run (Smith, 2003). Stakeholder
Shareholders are not only influenced but also influence theory supports the notion that managers’ primary
management decisions and achievements of a corporation. obligation is to balance the shareholders’ monetary interests
Thus, their reaction to a sponsorship agreement should be of against the interests of other stakeholders such as customers,
great interest to corporate sponsors. Especially, sponsorship local communities and employees (Smith, 2003).
agreements of international sport events become even more A stakeholder is “any group of individual who can affect or is
important to companies that do international business. These affected by the achievement of the organization’s objectives”
companies can use sponsorship as a communication platform (Freedman, 1984, p. 46). The identification of the stakeholders
to increase their image, reputation, and visibility in foreign of a business is at the core of stakeholder theory. Four
countries, and consequently attract the interest of national qualifications have been provided in the literature in identifying
and international investors. stakeholders (Starik, 1994). First, a (contractual or non
This study evaluates Olympic and sport federation contractual) connection between a stakeholder and a company
sponsorships at the international and national level must exist. Second, a stakeholder seeks specific benefits and
respectively in order to assess its effectiveness as a business represents certain interests. Third, due to the stakeholder’s
investment. To accomplish this objective, the impact of interest, a stakeholder exists in a company’s environment.
sponsorship announcements on the stock prices of Fourth, stakeholders may encompass various configurations
international sponsoring firms was evaluated. The such as individuals and constituencies. Initially, Freedman
contribution of this study is threefold. First, it employs (1984) proposed seven stakeholders: shareholders, employees,
stakeholder theory to approach the issue of sponsorship. customers, suppliers, financial community, activist groups and
Previous stakeholder approaches in sports have been confined the government. Other stakeholders mentioned in the literature
to the management of sport organizations in order to either are the media (Logsdon and Lewellyn, 2000), special interest
identify key stakeholders of specific sport entities (Friedman
groups, competitors, trade unions, lenders, NGOs, the general
et al., 2004; Tesone et al., 2005) or analyze sport
public, and partners (Friedman and Miles, 2002). Mitchell
organizations’ corporate social responsibility (Smith and
et al. (1997) provide a broader definition of the term and argue
Westerbeek, 2007; Walters and Chadwick, 2009). To the
that stakeholders are all the groups with salient claims on the
author’s knowledge, this is the first endeavor that deploys
firm which can be distinguished based upon three criteria:
stakeholder theory in sponsorship in order to examine its
1 legitimacy;
effectiveness and provide managerial guidelines. Second, this
2 power; and
research utilizes two types of sponsorship (event and sport
3 urgency.
organization sponsorship) to evaluate its effectiveness in an
international mega sport event such as the Olympic Games, Legitimacy refers to the validity of a stakeholder’s claim upon
and in sport organizations such as sport federations. Third, the firm; power is the ability of a party to achieve desired
this study differentiates from previous research in several outcomes despite resistance; and, urgency refers to the
methodological issues. Besides the standard approach, event stakeholder’s need for resolution in terms of time-sensitivity
study methodology, a multiple regression model has been and degree of impact upon its interests.

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Rodoula Tsiotsou Volume 26 · Number 8 · 2011 · 557 –565

According to Donaldson and Preston (1995), stakeholder through the size of their shareholding and can act as
theory can be utilized in three ways: in a descriptive/empirical intermediaries for smaller shareholders” (p. 9), whereas the
mode by simply describing and explaining specific corporate second group has limited voting rights and their main actions
characteristics and behaviors; in an instrumental manner by are confined to selling or buying shares.
identifying the connections between stakeholder management
and the desired outcomes of a company; and in an normative 2.2 A Stakeholder approach to sponsorship
way by providing moral/philosophical guidelines on how The most often used theoretical approach to sponsorship has
corporate managers ought to behave. been the exchange relationship between the sponsor and the
Communication between a firm and its stakeholders plays a sponsored guided by the tenets of rationality, marginal utility
central role in stakeholder theories. Rowley (1997) proposed the and fairness (McCarville and Copeland, 1994). According to
structural theory of stakeholder influences in an effort to explain these notions successful sponsorships involve the exchange of
the relational context of a firm and its stakeholders. According valued resources on the basis of each partner’s contribution
to this approach, two structural factors determine the manner of leading to balanced relationships and to satisfied partners.
interaction between an organization and its stakeholders: the Meenaghan (2001) proposed a more complex theoretical
density of the network and the focal organization’s centrality in framework predicated on key axioms such as goodwill in
the network. Densely connected networks allow for information sponsorship, the process of image transfer and the concept of
exchanges, the coordination of activities (Oliver, 1991), and for fan involvement. The first tenet posits that consumers perceive
the creation of efficient communication mechanisms between commercial sponsorship as involving benefits to society (a halo
stakeholders and shared behavioral expectations (Rowley, of goodwill effect) resulting in a lowering of consumer defense
2000). Polonsky (1995) states that a firm’s co-operation and mechanisms. This halo of goodwill phenomenon differentiates
communication with all stakeholders is vital while the direct sponsorship from advertising and may encounter to consumers
communication with its stakeholders assists in making them varied receptivity to these two alternative methods of marketing
involved for achieving common goals. communications. The second notion argues that different
The stakeholder perspective provides a valuable tool for sponsorship categories (i.e. sports, arts, or social causes)
dealing with multiple stakeholders and multiple conflicting transfer different image values to the sponsor whereas the last
interests (Freedman, 1984) by encouraging a stakeholder notion states that sponsorship intervenes in the emotional
symbiosis and enabling each stakeholder to flourish but not at relationship between consumers and their leisure/social
the expense of others (Andersen, 1997). However, because activities. However, both of the above approaches are
each firm faces different set of stakeholders, it is prudent to confined to certain parties: the exchange perspective
focus on individual stakeholder relationships for exploring examines the relation between the sponsor and the sponsored
their interests and behaviors (Rowley, 2000). organization whereas Meenaghan’s (2001) view, although
considers more constituencies (e.g. sponsors, consumers, and
2.1.1 The role of shareholders in stakeholder approaches sport fans) and recognizes the effects of sponsorship on society,
Based on Mitchell’s et al. (1997) attributes of stakeholders, does include all the parties involved.
research has shown that shareholders encompass all of them To consider all the constituencies involved in a sponsorship,
(power, legitimacy and urgency) and to a higher degree than stakeholder theory is proposed here as the most appropriate
any other stakeholders (Agle et al., 2000). Shareholders not theoretical framework in managing sponsorship. A stakeholder
only constitute the principal stakeholders of a firm but also perspective in sponsorship can benefit academic scholars and
determine its market growth strategy (Logsdon and Lewellyn, practitioners in identifying all the stakeholders involved in a
2000). The main interests of the shareholders are usually corporate sponsorship; in understanding their needs, influences,
addressed through profits. Shareholders invest their capital and goals; in prioritizing stakeholders; and in providing a
and expect to get a return either through dividends paid out comprehensive picture that will assist in better evaluating
by the corporation or through increased share prices (Smith, sponsorship effectiveness. Overall, a stakeholder approach
2003). However, shareholders can create the appropriate provides useful guidelines in effectively managing sponsorship
incentives for top managers and monitor their behaviors in investments by taking into consideration and serving the
order to maximize a company’s profits (Jensen and Meckling, divergent (and often conflicting) interests of all the stakeholders
1976). Furthermore, shareholders can act as activists who involved. Thus, to maintain profitable relationships with all
take actions (e.g. submit a shareholder resolution) to bring stakeholders and be successful in the long-run (Smith, 2003), a
about social change by pressing their interests in order to corporation needs to take into account all the stakeholders
influence corporate behavior (Van Buren and Paul, 2000). involved in a sponsorship. Furthermore, a stakeholder approach
Shareholder activists make sure that moral standards provides the foundation for further research initiatives in
characterize all corporate activities, and information about sponsorship by examining its effects on stakeholders that have
these activities and corporate social performance is available not taken into account before (e.g. communities, media,
(Van Buren and Paul, 2000). suppliers, competitors) or by combining stakeholder groups and
Friedman and Miles (2002) have identified four types of their reactions to sponsorship.
relations/contracts between a firm and its stakeholders: explicit Taking an instrumental stakeholder perspective, the present
recognized contracts, implicit recognized contracts, implicit study proposes that a number of stakeholders are affected and
unrecognized contracts and no contracts. In explicit recognized affect a corporation in a sponsorship. As shown on Figure 1,
contracts, they identify shareholders whose relation with the these stakeholders are the initial ones (employees, managers,
top management and the firm is characterized as necessary customers, competitors, media, suppliers, community, and
compatible. They also distinguish shareholders as large or shareholders), and new stakeholders (sport consumers,
institutional and small, individual shareholders. The first group sponsored organization, and sponsorship agencies). Because
of shareholders “can directly influence corporate policy analysis of all the stakeholder groups and their role in

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Rodoula Tsiotsou Volume 26 · Number 8 · 2011 · 557 –565

Figure 1 Stakeholders involved in a corporate sponsorship

corporate sponsorship is beyond the scope of this paper, the indicated that Olympic sponsorship has a small positive
focus here is on the shareholders reactions to sponsorship. effect on the marketplace and statistically significant increases
in stock prices. Johnson and Cornwell (2004) studied the
2.2.1 Shareholder reactions to sponsorship announcements effect of 51 sponsorship announcements of Australian firms
Several studies attempting to evaluate sport sponsorship sponsoring the 2000 Olympic Games on their stock prices.
effects on shareholders reaction report positive effects. They reported a small, positive increase in firms’ values.
Cornwell et al. (2004) studied the impact of major league
sports (baseball, basketball, football, hockey and golf) official
product or services announcements on stock prices of 53 3. Method of the study
sponsoring firms. They found that official sponsorships were
This research examines the connections between the practice
perceived positively by stock market investors. Specifically,
of shareholder management and achievement of corporate
the increase in share values around the time of the
performance goals in a business to business situation such as
sponsorship announcements ranged between $123 million
sponsorship. Due to their central role in a corporation,
to $558million. Sponsorship effectiveness, measured by stock
shareholders were chosen to be studied and specifically, their
prices, has been found to be related to the “relatedness” or
reactions to sponsorship investments. Financial constraints
“congruence” between a sponsor and the sport (Cornwell
did not allow research on all stakeholders involved in
et al., 2001). However, the most impressive results were found
sponsorship. Moreover, because communication between a
by Pruitt et al. (2004) on a study of the impact of NASCAR
firm and its stakeholders is crucial for getting the latter
sponsorship announcements on the stock prices of the
involved in accomplishing common objectives, the
sponsors. The 24 companies that sponsored NASCAR
information provided to stakeholders regarding sponsorships
between 1995 and 2001 gained an average increase in stock
value of $324 million. Their findings indicated the largest was also taken into account in evaluating the results.
The hypotheses examined were:
increases in shareholder wealth ever recorded in the
sponsorship literature. Only one study failed to convey H1. Olympic sponsorship announcements will result on
statistically significant positive changes in stock prices positive shareholders’ reactions, expressed as
probably due to the diversity of the data. Kinney and Bell statistically significant returns of listed firms.
(2003) studied 61 sport sponsorships announced in the Wall H2. Sport federation sponsorship announcements will
Street Journal. Overall, they found no statistical evidence of result on positive shareholders’ reactions, expressed
positive impact on the stock prices of the sponsoring firms. as statistically significant returns of listed firms.
With regard to the impact of Olympic sponsorships, the H3. All the events (Olympic sponsorship þ sport
literature presents similar findings. Miyazaki and Morgan federation sponsorship announcements) will result on
(2001) used event study analysis to assess the market value of positive shareholders’ reactions, expressed as
the 1996 Olympic Games sponsorships. Their results statistically significant returns of listed firms.

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 International and national sport sponsorship Journal of Business & Industrial Marketing
Rodoula Tsiotsou Volume 26 · Number 8 · 2011 · 557 –565

3.1 Event study analysis analysis because they met all the above criteria. The same
Event study analysis has enjoyed a wide acceptance in the field criteria were used for identifying the six sponsors of the
of finance, marketing, and management by using the CAR national sport federations. The federations of soccer,
analysis (Cumulative Abnormal Returns). In marketing, event basketball, track and field, and weight lifting were chosen
study analysis has been used to assess the impact of marketing because of their importance and popularity. Soccer is the
variables such as sponsorship (Cornwell et al., 2004; Johnson most popular sport not only in Greece but globally with over
and Cornwell, 2004; Miyazaki and Morgan, 2001), new 3.5 billion people watching and/or playing it (Quinn, 2007).
product (Chaney et al., 1991), brand extension (Lane and Basketball attracts the interest of 400 million consumers
Jacobson, 1995) and celebrity endorsement (Agrawal and (Quinn, 2007) whereas track and field and weight lifting are
Kamakura, 1995) announcements on stock returns. most attractive sports found to interest Greeks (attending
Mackinley (1997) reviews several studies using event study and/or watching on TV) along with soccer and basketball.
analysis. Most of these studies show that excess returns are Thus, the final sample size of the analysis was 11. Tables I
not normally distributed. The violation of normality and II presents the firms used for the study where all
hypothesis is due to excessive skewness and sponsoring firms were international companies doing business
heteroscedasticity, which can cause significant statistical mostly in other European countries. Moreover, in addition to
inference problems (Brown and Warner, 1985). On the the Athens Stock Exchange, three of these sponsors were
other hand, researchers have recently applied multivariate listed in other international Stock Exchanges (New York and
regression models (MRM) using a dummy variable to
London Stock Exchanges). Data for stock prices were
represent a significant event date of different events (e.g. a
obtained through the Athens Stock Exchange daily files.
variable takes the value of 1 in the event date and 0
otherwise). The MRM approach relies on traditional t-test
statistic and is not as sensitive to the violation of the normality
hypothesis especially when bootstrapping is used (Hein et al.,
4. Results
2001); Krammer, 2001). The bootstrap technique often 4.1 Olympic Sponsorship announcements
provides inferences that are substantially more accurate than Table III presents abnormal returns aggregated over stocks for
ones based on asymptotic theory (Mickinnon, 2002). the Olympic Sponsors. The power of the z-test for a mean
Therefore, both techniques the CAR analysis and the average standard error of 0.0176 was calculated. Using the
MRM/bootstrap approach were used in this study to MRM approach, the results regarding the CAR remained the
examine the impact of sponsorship announcements on stock same (Table IV). However, studying the abnormal returns
prices. (AR), there is a slight positive (0.2 percent) significant effect on
The event type methodology is used to test the sort-term day 22, and a small negative effect on the next day. A possible
reaction hypothesis and the extent to which this is related to explanation is the information leakage by media on day 22,
sponsorship announcements, by analyzing the excess return and day 21. However the overall result on the [22, 0] window
or abnormal return. Abnormal returns are computed is not significant.
according to the market model which explains the stock
returns movements in relation to market’s returns. Estimating
the market model produces t-statistics for each estimated 4.2 Sport federation sponsorships
dummy variable coefficients. Because returns display even a Table V presents the abnormal returns aggregated over stocks
small degree of heteroscedasticity and skewness, the sample for the sport federation sponsorship announcements.
standard deviation was used to normalize the t-statistic Significance was found on six days before the official
(Krammer, 2001). In this study, the market model is announcement is made and the fifth and sixth day after
estimated to produce the abnormal returns (AR) and sport sponsorship announcements. However, before the
cumulative abnormal returns (CAR). T-statistic was announcement the effect was negative whereas after the
examined to evaluate the power of the tests and the announcement on days five and six there is a positive effect. It
bootstrap technique proposed by Krammer (2001) was seems that either the market responded much later than the
employed to test for statistical significance of the dummy sponsorship announcement or the positive effect might not be
variable (MRM approach). Finally, SHAZAM econometric related to the event but it is the results of other developments.
software for windows standard edition was used for all the Moreover, the negative effect detected on day 2 6 might not
statistical calculations of the study. have anything to do with the sponsorship announcement.
The cumulative abnormal returns (CAR) of the stocks of
3.2 Sponsorship data the sponsoring firms are presented on Table VI. Significant
The sponsors of the 2004 Olympic Games (an international effect were detected on the time intervals (2 16, 2 20), (2 2,
mega sport event) that took place in Athens, Greece and the þ2), and (þ 5, þ9). In two cases a negative effect is presented
sponsors of the football (soccer), basketball, track and field, and only in the last interval the effect is positive. For the time
and weight lifting sport federations constitute the data of the interval (þ 5, þ9) the positive effect was 4.35 whereas for the
study. The basic criteria for selecting a firm were: interval (22, þ2) there was a negative effect of 22.7 and for
.
to be in the Athens Stock Exchange (ASE); the interval (216, þ20) the negative effect was 2 3.4. Further
.
to do international business; and examination of the data showed that the positive effect of the
.
to have made an official announcement of the
sport federation announcements was due to the influence of a
sponsorship.
particular stock and it was not present in all stocks. Thus, this
From the 28 national sponsors, supporters and suppliers of effect should be interpreted with caution because it does not
the 2004 Olympic Games, only five firms were included in the represent the sport federation sample but only one case of it.

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Rodoula Tsiotsou Volume 26 · Number 8 · 2011 · 557 –565

Table I Sponsoring firms of the study

Firm Product category Type of firm International business in Stock exchange
2004 Olympic sponsors
Alpha Bank Financial services Private Albania, USA, Great Britain, Ukraine, FYROM, Bulgaria, Cyprus, Athens, London, New York
Romania, Serbia
OTE Telecommunications Public Albania, FYROM, Bulgaria, Romania, Serbia Athens, New York
Cosmote Telecommunications Public Albania, FYROM, Bulgaria, Romania, Serbia Athens
Delta Dairy products Private Bulgaria, Cyprus, Romania, Serbia, Ukraine, Georgia, FYROM Athens
DEI Electrical energy Public Albania, South East Europe Athens

Table II Sponsoring firms of the study

Firm Product category Type of firm Sport federation International business in Stock exchange
National sport federation sponsors
OPAP Lottery and betting Public Soccer Cyprus Athens
Peiraius Bank Financial services Private Soccer USA, UK, Egypt, Romania, Bulgaria, Cyprus, Athens
Ukraine, Serbia
Metrolife Emporiki Insurance services Private Track and field Romania Athens
Eko-Elda Petroleum products Public Track and field Albania, Serbia, Bulgaria, Georgia, Cyprus Athens
Eurobank Financial services Private Basketball UK, Bulgaria, Cyprus, Luxemburg, Turkey, Poland, Athens
Ukraine, Romania, Serbia
Ethniki Bank Financial services Public Weight lifting UK, Albania, Australia, Bulgaria, Egypt, FYROM, Athens, New York
Romania, Serbia, South Africa, Turkey

Table III Results for the Olympic sponsorship announcements by day Table V Results for sport federation sponsorship announcements by day
Abnormal returns Z-statistic Abnormal returns Abnormal returns Z-statistic Abnormal returns
Day (AR) Z-CAR of MRM * * Day (AR) Z-CAR of MRM * * *
25 20.0044 20.5610 – 26 20.0127 2 1.7000 * * –
24 0.0047 0.5767 – 25 20.0052 2 0.7114 –
23 0.0048 0.6234 – 24 0.0037 0.4770 –
22 0.0025 0.3205 0.0023 * 23 20.0053 2 0.6927 –
21 20.0003 20.0254 20.0006 * 22 20.0070 2 0.9197 20.006
0 20.0046 20.5856 20.0040 21 20.0065 2 0.8833 20.007
1 20.0120 21.5369 20.0120 0 20.0061 2 0.7963 20.007
2 0.0027 0.2879 0.0008 1 0.0003 0.0365 0.002
3 0.0031 0.4000 – 2 20.0086 2 1.1408 20.009
4 0.0016 0.1980 – 3 0.0013 0.1656 –
5 0.0090 1.1387 – 4 0.0058 0.7554 –
5 0.0158 2.1196 * –
Notes: *Significant at the 0.05 level; * * in all cases the empirical size was
0.049, very close to the theoretical which was 0.05 6 0.0209 2.7684 * –
Notes: *Significant at the 0.05 level; the power was greater than 0.8;
* *significant at the 0.10 level; * * *in all cases the empirical size was 0.049,

Table IV Cumulative abnormal returns of Olympic sponsorship very close to the theoretical which was 0.05
announcements
Time interval Cumulative abnormal returns (CAR) Z-CAR 4.3 Total results for sponsorship announcements
(216, 2 20) 0.006 0.43 The results for the total sample of sponsorship
(211, 2 15) 20.011 20.69 announcements show that there is no significant effect of
(210, 2 6) 20.012 20.76 sponsorship announcements on the stock prices of the
(25, 21) 0.006 0.42 corporate sponsors.
(22, 2) 20.011 20.67
(25, 5) 0.007 0.24 5. Discussion/implications
(5, 9) 20.008 0.43
(10, 14) 20.023 21.28 The increasing globalization of sports makes sponsorship an
(15, 19) 20.015 20.85 international communication vehicle, which can assist in
achieving global and local objectives by transmitting a

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Rodoula Tsiotsou Volume 26 · Number 8 · 2011 · 557 –565

Table VI Cumulative abnormal returns of sport federation sponsorship usual print media delay usually over television and radio. Thus,
announcements television and radio usually announce sponsorship agreements
before they are officially publicized by the parties involved
Time interval Cumulative returns (CAR) Abnormal Z-CAR resulting probably in an early shareholders reaction. The
(216, 2 20) 20.033 2 2.06 * positive effects are very small confirming previous findings
(211, 2 15) 20.007 2 0.05 (Johnson and Cornwell, 2004; Miyazaki and Morgan, 2001)
(210, 2 6) 20.017 2 0.98 and in some cases it is not clear if they are due to sponsorship
(25, 21) 20.025 2 1.23 announcements. The results differed somewhat on the sport
(22, 2) 20.028 2 1.66 * *
federation sample where positive effects were found on the 6th
day of the event.
(25, 5) 20.008 2 0.44
These findings may raise even more questions regarding
(5, 9) 0.043 2.58 *
whether shareholders consider and understand sponsorship as
(10, 14) 20.018 2 0.15
an investment (use of resources intended to increase future
(15, 19) 20.004 2 0.19
production output or income) or if this is just a belief of the
Notes: *significant at the 0.05 level; * *significant at the 0.10 level management and marketing team of the firms which is not
adequately communicated to principal stakeholders. An
investigation on the dates of sponsorship announcements
consistent brand image across global markets (Rines, 2002). indicate that in several occasions a press conference or any
This study examined the impact of sponsorship other event that could provide more publicity and attract
announcements on shareholders of international sponsoring investors’ attention did not follow press releases.
firms. The findings provide useful theoretical and practical Furthermore, an examination of the Athens Stock Exchange
implications that deserve mention. official announcements showed that corporate sponsors did
Although no positive effects were found, the study not inform shareholders about their sponsorship agreements.
contributes significantly to the sponsorship literature with the Thus, lack of communicating the sponsorship to target
theoretical foundation proposed here. To the author’s stakeholders (shareholders) might be another reason that
knowledge, this is the first study that proposes stakeholder explains the results of the study. Contrary to the stakeholder
theory in managing and evaluating sponsorship. The perspective that embraces accountability and communication
stakeholder perspective can benefit academic scholars and as two basic elements of corporate governance (Nwanji and
practitioners in identifying and recognizing all the stakeholders Howell, 2007), international sponsoring firms do not seem to
involved in a corporate sponsorship; in understanding their take into account the interests of their shareholders nor
behavior and reactions to various types of sponsorships; in communicate their business investments to them.
clarifying and categorizing sponsorship goals according to their Consequently, an under-exploitation phenomenon of the
stakeholders (prioritization of stakeholders); and in providing a opportunities provided by a sponsorship investment becomes
comprehensive picture that will assist in better evaluating apparent here making a stakeholder approach even more
sponsorship effectiveness. So far, research shows that corporate imperative. One of the main goals of stakeholder theory is to
sponsors are confined to evaluating sponsorship in terms of help top management:
consumers and shareholders reactions. Stakeholder theory .
understand their stakeholder environment;
provides the foundation for considering the interests of all the .
manage more effectively their relations with all
other parties involved in a sponsorship. In order to maintain stakeholders involved; and
profitable relationships with all stakeholders and be successful .
improve the value of the consequences of their decisions
in the long-run (Smith, 2003), a corporation needs to take into and reduce the damage to stakeholders (Nwanji and
account all the stakeholders involved in a sponsorship. Overall, Howell, 2007).
a stakeholder approach provides useful guidelines in effectively
managing sponsorship investments by taking into consideration Thus, corporate sponsors need to embrace a stakeholder
and serving the divergent (and often conflicting) interests of all perspective in order to manage more effectively and fully
the stakeholders involved. However, a stakeholder perspective exploit sponsorship.
cannot benefit managers only in the management and
sponsorship evaluation process but in the initial stage of their 6. Future research recommendations/limitations
corporate social responsibility plan. Furthermore, a stakeholder
approach provides the foundation for further research This paper has attempted to raise the ambition of sponsorship
initiatives in sponsorship by examining its effects on studies by seeking a more comprehensive theoretical
stakeholders that have not taken into account before framework (stakeholder theory) and research methodology
(e.g. communities, media, suppliers, competitors) or by to measure sponsorship effectiveness. If the saying “if you
combining stakeholder groups and their reactions to can’t measure it, you can’t manage it” holds, then it becomes
sponsorship. apparent that we need to improve our measurements of
The empirical results provide evidence that the acquisition of sponsorship effectiveness. It becomes apparent that when
Olympic and sport sponsorships is received almost indifferently assessing sponsorship effectiveness a number of stakeholders
by the national and international investment marketplace. The (e.g. community, consumers, employees) need to be taken
data of the study indicated that national and global investors into consideration in order to gain a more comprehensive
(shareholders) did not react to Olympic and/or sport federation picture. Thus, when studying international sponsorships of
sponsorship announcements. However, a small positive effect global firms, the global stakeholders need also to be identified
two days before the sponsorship announcements was observed and evaluate their reactions to this investment. Moreover, the
in the Olympic sponsorships. This could be explained by a quality and level of communication between top management

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Rodoula Tsiotsou Volume 26 · Number 8 · 2011 · 557 –565

of the sponsoring firm and its stakeholders may also stimulate Cooper, A. (2003), “The changing sponsorship scene”,
further research inquiries. Furthermore, there is no study Admap, Vol. 444, November, pp. 30-2.
available in the literature reporting other types of shareholders Cornwell, B.T., Pruitt, S.W. and Clark, J.M. (2004),
reactions (e.g. attitudes and beliefs) to sponsorship “The official paper on official sponsorships: the impact of
investments. Information about how shareholders feel major league sports official sponsorship announcements on
regarding sponsorship is necessary in order to better the stock prices of sponsoring firms”, working paper.
evaluate and explain their reactions in stock markets. Cornwell, B.T., Pruitt, S.W. and Ness, R.V. (2001),
Another interesting research avenue would be to study if “An exploratory analysis of the value of winning in
international firms have different objectives and ways of motorsports: sponsorship-linked marketing and
managing sponsorship when sponsoring international sport shareholder wealth”, Journal of Advertising Research,
events or international sport organizations, than when dealing Vol. 41, pp. 17-31.
with national sponsorships. A comparison of the effects of Donaldson, T. and Preston, L.E. (1995), “The stakeholder
announcements of different types of event sponsorship theory of the corporation: concepts, evidence, and
(e.g. international sport events vs international cultural implications”, Academy of Management Review, Vol. 20
events) could be a future research task. Proper sponsorship No. 1, pp. 65-91.
leveraging and activation strategies take time to implement Farrell, K.A. and Frame, S.W. (1997), “The value of Olympic
and take time for the corporation to realize results. Therefore, sponsorship: who is capturing the gold?”, Journal of Market-
future research should be more longitudinal in nature – Focused Management, Vol. 2 No. 2, pp. 171-82.
whether that research uses event study methodology or not. Freedman, R.E. (1984), Strategic Management: A Stakeholder
The study was intended to produce meaningful data that Approach, Pitman, Boston, MA.
would provide a tool and data source on which quality Friedman, A.L. and Miles, S. (2002), “Developing
marketing efforts and sponsorship activities can be based. stakeholder theory”, Journal of Management Studies,
However, a number of limitations became apparent during Vol. 39 No. 1, pp. 1-21.
the course of this study. First, this research is limited to Greek Friedman, M.T., Parent, M.M. and Mason, D.S. (2004),
sponsorships (Olympic and non-Olympic) within the specific “Building a framework for issues management in sport
socio-economic environment. Moreover, event study through stakeholder theory”, European Sport Management
methodology is used to test only short-term reactions, thus Quarterly, Vol. 4, pp. 170-90.
limiting our ability to detect long-term effects of sponsorships Gwinner, K. and Swanson, S. (2003), “A model of fan
announcements. However, when employing event study identification: antecedents and sponsorship outcomes”,
methodology by using a longer time window, the isolated Journal of Services Marketing, Vol. 17, pp. 275-94.
effects of sponsorship announcements cannot be captured Hein, S.E., Westfall, P. and Zhang, Z. (2001),
because other business activities might cause stock prices “Improvements on event study tests: bootstrapping the
fluctuations (e.g. mergers, introduction of new products/ multivariate regression model”, working paper, Texas Tech
services). Regardless of the isolated sponsorship effects University, Lubbock, TX.
captured on this study, any generalizations of the present Hoek, J., Gendall, P., Jeffcoat, M. and Orsman, D. (1997),
findings should be made with caution. “Sponsorship and advertising: a comparison of their
effects”, Journal of Marketing Communications, Vol. 3,
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shareholder wealth”, Journal of Advertising Research, Vol. 44 Rodoula Tsiotsou, PhD, is currently an Assistant Professor of
No. 3, pp. 281-96. Marketing in the Department of Marketing and Operations
Quester, P.G. (1997), “Awareness as a measure of Management at University of Macedonia, Greece. Her
sponsorship effectiveness: the Adelaide formula one grand
research interests include strategic services marketing, non-
prix and evidence of incidental ambush effects”, Journal of
profit marketing, and leisure services marketing (sports and
Marketing Communications, Vol. 3, pp. 1-20.
tourism). She has published in a variety of international
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available at: http://ezinearticles.com/?Most-Popular-Sports- scientific journals such as The Service Industries Journal,
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a global platform for meeting business objectives”, Economics Letters, Journal of Targeting, Measurement,
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Vol. 3 No. 4, pp. 449-65. and Voluntary Sector Marketing, Journal of Travel & Tourism
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theory of stakeholder influences”, Academy of Management & Sponsorship. Rodoula Tsiotsou can be contacted at:
Review, Vol. 22 No. 4, pp. 887-910. [email protected]

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