A review of the application of event studies in marketing

This paper provides a critique of the application of the event study methodology to the marketing field, reviews past research, identifies various strategies for improvement in the use of this methodology, and identifies future directions for research. This review is in three sections. The first section presents the findings of a comprehensive search not only of the marketing literature, but also of marketing studies using the event study methodology that are published in a large number of business, economics, and finance journals. The identified studies are categorized into a number of research fields. The event studies are organized chronologically and reviewed in terms of their specific research focus and empirical findings. In the second section, studies published in marketing journals between 2001 and 2007 are examined more closely to determine how well more recent research meets several best practice guidelines being proposed by various authors around the application of the methodology. The third part of the review explores how the event study methodology might be applied to existing areas of research, in addition to its potential application to a wider range of marketing issues. These include theory development in terms of the application of more specific or appropriate theory to justify the research predictions; replication and extension of studies either due to changes in social attitudes, government legislation or methodological issues that challenge previous research findings; the development of new areas of research interest including the links between advertising and childhood obesity, drugs, and sport, the impact of new technological developments, and the effects of advances in internet marketing and satellite advertising; and advancing the use of the methodology to marketing challenges in the rapidly expanding regions such as China and India. It is expected that the use of the event study methodology in marketing will continue to gain momentum due to continuing demand for marketing actions and assets to be evaluated in financial terms in order to illustrate the return on investment.