Shareholders’ reaction to ethical image of sports teams: An event study in the Indian Premier League
(2019). Decision, 46(4), 283–300.
Cited 3 times · OpenAlex, 2026-11-07
In short
The study looks at how stock investors react when an Indian Premier League cricket team or its parent firm is involved in unethical behaviour. Investors mark down the value of the firm even when the behaviour was legal and may have helped profits, or when it was illegal but did not affect day-to-day business. Reputation for ethics, not just results on the field, appears to matter to shareholders.
Abstract
Using event study analysis on a sports team and parent firm in the Indian Premier League, we show that investors react adversely to: (1) unethical but legal activity that may have a positive impact on the firm’s value and (2) unethical and illegal activity that does not necessarily impact the day-to-day performance of the firm. We use the novel sample-quantiles test to analyze the events in a ‘single-firm single-event’ context. Results suggest that investors are sensitive to and care about the ethical image of the sports team and parent firm. Further, when the parent firm’s core function is unrelated to the sport, the performance of the team may not have a significant impact on the firm’s valuation. We also make a broader contribution wherein we provide direct evidence linking unethical activities with negative valuation, while ruling out the rent-seeking explanation.
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