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The NASCAR Phenomenon: Auto Racing Sponsorships and Shareholder Wealth

Published online by Cambridge University Press:  31 January 2005

STEPHEN W. PRUITT ,
T. BETTINA CORNWELL  and
JOHN M. CLARK
STEPHEN W. PRUITT
Affiliation:
Henry W. Bloch School of Business and Public Administration, University of Missouri—Kansas City, pruittst@umkc.edu
T. BETTINA CORNWELL
Affiliation:
University of Queensland, Brisbane, Australia, b.cornwell@business.uq.edu.au
JOHN M. CLARK
Affiliation:
University of Southern Mississippi, clarkj@cba.usm.edu
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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.

Type
Research Article
Information
Journal of Advertising Research , Volume 44 , Issue 3 , September 2004 , pp. 281 - 296
Copyright
© Copyright © 1960-2004, The ARF

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