Analysis of the relationship between racing performances and stock returns of car manufacturers in motor sports: The case of Formula 1 World Championship

Since the beginning of the automobile racing, car manufacturing companies have mainly used automobile racing to sell more cars. As a result of the growth of the automobile industry and the inclusion of more automobile manufacturers from different countries in the industry today, competition has increased significantly. Many manufacturers who want to increase the recognition of their companies and cars and gain an advantage among their competitors have started to compete in motorsport. In addition, some car manufacturers, which have significantly expanded financially and have an asset size of Billion Euro / Dollars, have started to be traded on various stock exchanges. As a result, there is a need to analyze the relationship between the performance of car manufacturers competing in motorsport and the weekly closing values of companies' stocks and stock returns. In the study, the relationship between the points obtained from the races and the weekly closing values of the companies' stocks in the 2010-2021 period for Ferrari and Mercedes-Benz and in the 2016-2021 period for the Renault company, which competed as teams in the Formula 1 World Championship, was analyzed using the Toda-Yamamoto Causality Test. The volatility in the stock returns of the companies was analyzed using the EGARCH model. As a result of the analysis, it has been concluded that there is a significant causal relationship between the scores of the Ferrari company's F1 team from the races in the mentioned period and the weekly closing value of the stock, while there is no such relationship for Mercedes-Benz and Renault companies. In addition, the existence of an asymmetrical relationship in the stock return of the Ferrari company was determined, but this result could not be reached for other companies.