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http://ssrn.com/abstract=874208
 
 

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Event Studies and the Law: Part II: Empirical Studies of Corporate Law


Sanjai Bhagat


University of Colorado at Boulder - Department of Finance

Roberta Romano


Yale Law School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)


American Law and Economics Review, Vol. 4, No. 2, pp. 380-423, 2002

Abstract:     
This article is the second part of a review of the event study methodology, which has proved to be one of the most successful uses of econometrics in policy analysis. In this part we focus on the methodology's application to corporate law and corporate governance issues. Event studies have played an important role in the making of corporate law and in corporate law scholarship. The reason for this input is twofold. First, there is a match between the methodology and subject matter: the goal of corporate law is to increase shareholder wealth, and event studies provide a metric for measurement of the impact upon stock prices of policy decisions. Second, because the participants in corporate law debates share the objective of corporate law, to adopt policies that enhance shareholder wealth, their disagreements are over the means to achieve that end. Hence, the discourse can be empirically informed. The article concludes by sketching the methodology's use in evaluating the economic effects of regulation. While event studies' usefulness for policy analysis is by now familiar in the corporate law setting, we hope that our two-part review will suggest appropriate applications to other fields of law.

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Date posted: February 29, 2008  

Suggested Citation

Bhagat, Sanjai and Romano, Roberta, Event Studies and the Law: Part II: Empirical Studies of Corporate Law. American Law and Economics Review, Vol. 4, No. 2, pp. 380-423, 2002. Available at SSRN: http://ssrn.com/abstract=874208

Contact Information

Sanjai Bhagat (Contact Author)
University of Colorado at Boulder - Department of Finance ( email )
Campus Box 419
Boulder, CO 80309
United States
303-492-7821 (Phone)
Roberta Romano
Yale Law School ( email )
P.O. Box 208215
New Haven, CT 06520-8215
United States
203-432-4965 (Phone)
203-432-4871 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Feedback to SSRN


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