Warning Flags on the Race Track : The Global Markets' Verdict on F1 Sponsorship

By analyzing the global financial markets' valuation of commercial sponsorships in Formula One (F1) motor racing, this paper advances research in the emerging area of return-on-investment of marketing resources. While previous research indicates U.S. markets approve of similar promotional investments, the results of this international event study (i.e., two-stage regression modeling of stock market returns) demonstrate the market value of firms entering into F1 sponsorships decline upon announcement. The level of investment and nationality congruence of the sponsorship appear to enhance the probability for negative returns in shareholder value