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Event Study Methodology Definition. The purpose of this paper is to define event evaluation develop a conceptual model of its process and elements review pertinent literature and draw conclusions pertaining both to the discourse on evaluation and its praxis. Given this basic premise one can study how a particular event changes a firms prospects by quantifying the impact of. From this determination the researcher can infer the significance of the event. General review of literature and development of a conceptual model of the evaluation process.
Some studies focus on a common date eg regulatory government and legal events. One underlying assumption is that the market processes information about the event in an efficient and unbiased manner. The model An event study typically tries to examine return behavior for a sample of firms experiencing a common type of event eg a stock split. Characterizing Event Study Methods 31 An event study. In sum assuming efficient markets event study methodology is a valuable statistical tool to evaluate issues in the social sciences. An event study is a statistical methodology used to evaluate the impact of a specific event or piece of news on a company and its stock.
More specifically its about how a researcher systematically designs a study to ensure valid and reliable results that address the research aims and objectives.
With respect to event study methodology. An event study is a statistical methodology used to evaluate the impact of a specific event or piece of news on a company and its stock. Some examples include mergers and acquisitions earnings an- nouncements issues of new debt or equity and announcements of macroe- conomicvariables such as the trade deficit. The event study approach a methodology in finance and economics used to detect the presence of event-induced returns within a period has become ubiquitous in recent debates about the impact of unconventional monetary operations. However followers of the efficient markets hypothesis argue that doing that is unnecessary because information is reflected in the securitys price. Finance theory suggests that capital markets reflect all available information about firms in the firms stock prices.