ISSUES IN THE USE OF THE EVENT STUDY METHODOLOGY: AN ANALYSIS OF MARKETING STRATEGIES IN PRODUCT RECALL STUDIES

Year 2019, Volume: 41 Issue: 1, 181 - 198, 12.07.2019

Fatma Hilal Ergen Keleş Burç Ülengin

https://doi.org/10.14780/muiibd.582318

Abstract

Event study methodology, which relies on market efficiency, investigates stock price changes after an event. Despite this methodology arises in the finance literature, it found a wide execution area including the marketing literature. Event study makes it possible to observe the effect of diverse marketing activities on financial value and is therefore very suitable for understanding marketingfinance interface. Empirical findings of product recall studies suggest that a product recall cause to a decrease the firm value. Furthermore, product recall studies adopt event studies that help better understand the reactions of the investors to different marketing strategies in a crisis context. However, only limited studies are available in this field. This paper covers (1) an instruction an instruction of the methodology, (2) a review that highlights the implementations of the method in the marketing literature, (3) summary of studies that measure the effect of marketing strategies in the product recall context, and (4) propositions for further empirical testing. We aim to guide further empirical studies.

Keywords

Event study methodology, product harm crises, product recall, marketing strategy

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