The event study is the central empirical tool in securities litigation and other litigation that depends on how information affects security prices. It relates news about a company and its industry to movements in the company's security price, allowing the analyst to determine whether, and by how much, a specific disclosure affected the price after accounting for market-wide and industry-wide movements.
We have the expertise and experience to design and conduct event studies using well-accepted statistical methods. We use an economic pricing model to partition each day's price movement into a market (and industry) effect and a firm-specific (abnormal) effect; we evaluate the statistical significance of the abnormal returns on the relevant disclosure dates; and we examine whether other, unrelated information, confounding news, became available on the same dates and, where it did, isolate its effect. This same methodology supports our analyses of materiality, loss causation, market efficiency, price inflation, and damages. Our work is based on widely-accepted and standard methodologies, frameworks, and analyses and we have been engaged by both plaintiffs and defendants in a wide range of industries in such matters.