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Event study methodology in the marketing literature: an overview

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Abstract

Event studies examine stock price movements around corporate events. These events can be voluntary firm announcements (e.g., new product introduction, alliance formation, channel restructuring) or announcements made by other entities such as regulatory bodies (e.g., FDA approval) or competitors (e.g., new market entry). The event study methodology was developed by finance researchers but has been widely adopted in other fields, including marketing. We review the manner in which event studies have been used in the marketing literature and summarize the current state of knowledge about the design and interpretation of event studies. We provide guidelines for researchers who use this methodology and for readers who draw inferences from results obtained from event studies, and we highlight a few areas where the methodology can be leveraged to help us better understand the financial value of marketing actions.

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Notes

  1. A smaller stream of literature examines long-term abnormal returns to events. We also review that literature and the methods that underlie it.

  2. There are no event studies reported in the fifth journal listed in that ranking, Journal of Consumer Research.

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Authors and Affiliations

  1. Texas A&M University, 4112 TAMU, College Station, TX, 77843-4112, USA

    Alina Sorescu & Larisa Ertekin

  2. University of Arizona, Tucson, AZ, 85721, USA

    Nooshin L. Warren

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  1. Alina Sorescu
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Correspondence to Alina Sorescu.

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J. Andrew Petersen served as Area Editor for this article.

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Sorescu, A., Warren, N.L. & Ertekin, L. Event study methodology in the marketing literature: an overview. J. of the Acad. Mark. Sci. 45, 186–207 (2017). https://doi.org/10.1007/s11747-017-0516-y

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