Professor Bainbridge...on law, politics, religion, culture & food

Are Event Studies Useful?

A new paper defends them:

This paper establishes empirical evidence that the event study methodology is useful for the competitive analysis of mergers. In particular, for a large sample of EU mergers during the period 1990-2002, we show that abnormal returns and ex post profitability of mergers are positively and significantly correlated. This is particularly true when using long event windows and, for rivals, in anti-competitive mergers.