Perspective
Apr. 22, 2015
Event study methods reliable in securities litigation?
Securities litigants have not been shy in asserting the event study's impressive academic pedigree. But there's a problem with how they do it. By Alon Brav and J.B. Heaton
In Halliburton Co. v. Erica P. John Fund Inc., 134 S. Ct. 2398 (2014) (Halliburton II), the U.S. Supreme Court held that defendants may defeat the fraud-on-the-market presumption of reliance at the class-certification stage with evidence that the misrepresentation did not in fact affect the stock price. Securities litigants typically use event study methodology to detect and measure price impacts. Halliburton II ...
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