event study

Definition

Analysis of the present or future impact of a particular news story or significant event related to a firm or a financial market. An event study tries to determine whether that event already has, or will have, a statistically significant effect on the firm or market such that it will affect its financial standing or performance. In case of a firm, the event may be within its control (such as the announcement of a dividend or merger) or outside its control (such as the passage of an adverse or favorable court ruling or law bill). For a firm, the effects of the event typically reflect in its stock price. For a market, the effects reflect in changes in supply and demand situation.

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