Abstract:
An Event study is primarily a statistical analysis technique that attempts to glean hidden information from accessible data. The key elements are: selecting an event window (often a release of information) and devising a method for predicting what the data (often stock value) would have been in the absence of the studied event -a simplified example might be the effect of a new product announcement on a company's stock price, using the average performance trend of competitors and/or recent performance trend of the company to project what the price would have been without the announcement (event). This paper discusses the basics of the methodology and reviews some of the documented challenges in applying it to complex real-world cases. An event study from the literature (introduction of the iPhone in the US) is reviewed and some suggestions are made on how to be an informed consumer of the potentially unique and valuable information that event study methodology can yield.
