Rational Exuberance? An Event Analysis of the 2008 Olympics Announcement

Abstract

China spent far more on the 2008 Olympiad than any previous host country. A retrospective assessment of the benefits of the 2008 Games to the Chinese economy will not be possible for several years. We use an adaptation of event study methodology that has been employed by studies of previous Olympiads to analyze the expected benefits of the 2008 Games. We show that the announcement that Beijing would host the 2008 Games led to a brief rise in the Shanghai exchange, but the euphoria quickly dissipated. We find that there was no corresponding decline in the stock exchanges of Beijing's closest rivals for the 2008 Games. There was a longer lasting impact on specific sectors of the Shanghai exchange, but this impact was not always positive.