What is an event study?

Event study is a research methodology used to determine whether the financial markets have a statistically relevant response - which means that it has positively or negatively affected the company's stock prices - at a past event or a future event. It is classified as a type of economic or economic measurement that uses a combination of mathematical economy and economic statistics and theory. The basic hypothesis of an event study is that the size of a change around a specified event can provide measures that can predict the effect on the value of shareholders during similar events in other companies. Typical events of events would analyze Sreaks of the same type of event as issuing the possibility of stocks that more companies experience. The actual release date would differ across companies, but would be standardized in the "event time" where the event horizon and stock prices during the time window of the event would be analyzed.

The reliability of an event study has usually appeared on the length of the event horizon used in the study. A common research theory in this area argues that short horizon events are more reliable than long horizon events, in which studies cannot control market effects for a longer period of time. There is an effective market hypothesis that says that if the information affects the stock price at all, it will do so immediately, so the longer the study window is, the less likely it will be that the price volatility will directly attribute the release of information.

There is a basic three -stage format for an event study. First, choose an event that has happened across several corporations and created a period before and after an event that serves as an event window. Furthermore, analyze changes in stock price and any change in market index for corporations during the event window. Finally, do a statistical analysis of whether any change in price is unusually inLáná or small compared to the usual yields for these corporations and control on market effects and external influences.