Issues in the Use of the Event Study Methodology: A Critical Analysis of Corporate Social Responsibility Studies

Abagail McWilliams, Donald Siegel, Siew Hong Teoh

Research output: Contribution to journalArticle

70 Scopus citations

Abstract

Organizational researchers are increasingly using the event study methodology to assess the effect of strategic decisions on firm performance. Unfortunately, event studies alone are inadequate because, at best, they provide estimates of the short-run impact on shareholders only and not on other corporate stakeholders. Furthermore, event study findings are sensitive to even small changes in research design. The authors illustrate the lack of robustness by examining five recent studies of corporate social responsibility (CSR) that report conflicting results. They conclude that these contradictory findings arise from significant differences in research design and implementation. The authors also demonstrate why it is inappropriate to draw conclusions regarding the managerial implications of CSR activities from these studies. Finally, they identify alternative methodologies that organizational researchers could use to supplement the event study approach to assess the overall impact of CSR on stakeholders.

Original languageEnglish (US)
Pages (from-to)340-365
Number of pages26
JournalOrganizational Research Methods
Volume2
Issue number4
DOIs
StatePublished - Oct 1999

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Strategy and Management
  • Management of Technology and Innovation

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