Responsible Investment

Many event SRI studies marred by methodological errors

February 2, 2008 | 1 min read
Image ‘Error” by Nick Webb (CC BY 2.0)

In their analysis “Event Studies in Management Research: Theoretical and Empirical Issues” (1999), McWilliams and Siegel find that issues such as sample size, identification of outliers, checking for confounding effects, and explanation of the abnormal returns, have not been uniformly addressed in the 29 studies in top management journals they examined. The authors also argue that “management articles often do not provide enough information to allow readers to judge whether the assumptions are valid.”

Furthermore, the authors point out that management studies rarely address the issue of market efficiency even though they often employ very long windows. “These windows imply that their authors believe market adjustment to new information is not immediate-or even quick. Few management studies, except those examining changes in corporate control, include discussions of whether events were anticipated, whilst several have windows that extend backward for several weeks before their events.”

To see if the employed research designs materially affected the end conclusions, McWilliams and Siegel reexamined three corporate social responsibility hypotheses from two publications in top management journals: Meznar et al. (1994)[1] on withdrawal from South Africa, and Wright et al. (1995)[2] on affirmative action programs and on discrimination suits. Using an alternative research design and after adjusting for methodological errors, the authors find that the results are no longer statistically significant.

McWilliams and Siegel contend that their critique “may be particularly significant in the area of CSR, because “This is an area in which researchers desire to have an impact on public policy decision making.” Also, “The presumed importance and ease of determination, of stock prices may explain why researchers have used the event study methodology to test theories pertaining to corporate social responsibility.” To guide authors and reviewers, they conclude their critique by outlining procedures for appropriate use of the event study method.


  1. Meznar, Martin B., Douglas Nigh, and Chuck C. Y. Kwok. “Effect of Announcements of Withdrawal from South Africa on Stockholder Wealth.” The Academy of Management Journal 37, no. 6 (December 1, 1994): 1633–1648.
  2. Wright, Peter, Stephen P. Ferris, Janine S. Hiller, and Mark Kroll. “Competitiveness Through Management of Diversity: Effects on Stock Price Valuation.” The Academy of Management Journal 38, no. 1 (February 1, 1995): 272–287.

This article was previously published on, February 2, 2008.

This article may be reproduced according to our terms of use with attribution (and link, if online) to To be cited as: “Many event SRI studies marred by methodological errors”, Lloyd Kurtz, and Ingrid Ramaan,, February 2, 2008.

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Ingrid Ramaan
Administrative Editor FSinsight

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