News Impact on Video Game Industry Companies Stocks

The purpose of this research is to examine the impact on video game companies` stock prices caused by 3 different event types: ex-dividend date, ESRB ratings and video game conventions including eSports. The analysis involves 10 video game companies on a time period of 06.01.2014 - 31.03.2020. Event study method was applied to this research along with constant mean return model and market model. The following 3 hypotheses were made during the research: H1: There are negative returns of video game companies` stock prices on an ex-dividend date and in post-event windows. H2: Video games with both Mature (M) and Teen (T) ESRB ratings have an overall equal impact on video game companies` stock returns. H3: Video game conventions and eSports events have a positive impact on video game companies` stock returns. The results of this study show negative and significant correlation between the video game events (eSports) and stock price reaction at [-1;+1] event window therefore leading to rejection of the H3. H2 is rejected as well which means there is a network effect for video games with larger pool of potential users. H1 is partially accepted due to the specificity of the Japanese stock market. The research may be valuable for the investors interested in the video game industry.