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Top1. Introduction
The event study method is a valuable and powerful technique that has helped logistics researchers to better understand the impact of changes from different logistics management approaches. It is an analysis of the impact of a given event. The method allows researchers to determine whether or not there is an abnormal change in the stock return, above and beyond a change that is otherwise expected, associated with the event; that is, whether it is believed (by stock market investors) that the event will make a substantial difference to the fortunes of the firm. Examining these abnormal returns allows researchers to infer whether or not the event was useful or valuable for the firm, based or the magnitude, direction, and overall significance of the event. From this, a logistics manager would be able to understand costs associated with a negative event – this may help them to invest in preventative measures. Alternatively, they can more clearly understand the positive returns that may accrue from taking particular management actions (e.g., implementing new technologies or changing business models).
The method has been used extensively in accounting and finance research. In management literature, however, the approach has been more widely used to examine a range of different scenarios including how firms becoming sustainable (Cheung, 2011), the impact of new executives joining the firm (Hendricks, Hora, & Singhal, 2014), the impact and management of recalls (Chen, Ganesan, & Liu, 2009; Ni, Flynn, & Jacobs, 2014; Wood, Wang, Olesen, & Reiners, 2017b), research into sustainable practices in construction (Kajander, Sivunen, Vimpari, Pulkka, & Junnila, 2012), the response to food safety issues (Dai, Kong, & Wang, 2013; Hammoudi, Hoffmann, & Surry, 2009; Mazzocchi, Ragona, & Fritz, 2009), or the impact of outsourcing business processes (Duan, Grover, Roberts, & Balakrishnan, 2014).
For logistics management researchers, a major focus is determining whether or not a logistics technique or management approach is capable of providing a substantial benefit to a firm. While a small number of firms, as highlighted in case studies, can successfully make use of an approach does not mean that, overall, it is capable of providing a benefit when generalized to other firms and circumstances. While logistics research is sometimes conducted with surveys, it can prove challenging to extract objective and reliable data using surveys. In contrast, finance researchers have found it valuable to use the event study analysis to determine the impact of an event. While a finance specialist may be more interested in the impact of a stock split, an operations manager might focus on the impact of a quality improvement program.