Event-study methodology in the context of M&As: a reorientation

Event-study methodology uses relatively short time frames to assess stock market reactions to discrete events, demonstrated by abnormal stock returns-or the difference between expected and actual stock prices (Cording et al. 2010; Haleblian et al. 2009). Initially developed in the field of financial economics in the late 1960s (Fama et al. 1969), event studies have become a ubiquitous method for measuring the performance effects of mergers and acquisitions (hereafter “M&As” or “acquisitions”). Indeed, while numerous methods have been used to assess the performance effects of acquisitions, reviews and meta-analyses have shown that event studies are the most dominant (Cording et al. 2010; Goranova et al. 2010; Haleblian et al. 2009; King et al. 2004).