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Event Study
Practical Law Glossary Item 6-574-8646 (Approx. 2 pages)
Glossary
Event Study
A statistical regression model often used in securities litigation. In an event study, an expert typically analyzes chronologies showing:
- Changes to the stock price throughout the class period.
- Dates when various types of public information became available.
- The estimated impact of the public information on the price of the security, using statistical and economic regression models to examine the relationship between the variables.
Experts may perform event studies early in the case to evaluate whether the alleged misrepresentations actually impacted the price of the stock. This tool also may provide counsel with preliminary estimates of potential damages and help identify loss causation and materiality issues. An event study is refined over the course of a litigation, as more information becomes available and its actual use in the action approaches.