Pitfalls of Single-Security Event Studies in Securities Litigation

Authors Alon Brav and J.B. Heaton bring to light some of the problems evident in the use of event studies in securities litigation in their recent article.1 As every expert knows, Courts have become enamored with event study methodology for ascribing information effects to stock prices. An expert’s opinion on market efficiency and/or damages is at risk if it is devoid of a supporting event study analysis.