Using event study methodology, this paper analyzes the capital market behavior related to shares of companies that sponsored the London 2012 Summer Olympic Games. We investigate the existence of abnormal returns and changes in trading volumes on announcement dates for companies at two sponsorship levels—Official Olympic Partners and Official Olympic Supporters. We also test for differential responses between British and non-British firms. We find that London 2012 Olympic sponsorships are associated with statistically significant increased share values for Official Partners as well as for British companies. We also observe that British sponsors, as a whole, had significantly higher than average trading volume on announcement dates. Furthermore, trading volumes for British firms were significantly greater than for non-British firms. Finally, we evaluate the possibility of principal-agent conflicts. In contrast to other research, we do not find evidence that agency issues influence the decision to become an Olympic sponsor.
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