Joe Bial Publishes Study on Analysis of Market Efficiency in Securities Class Actions

Litigation partner Joe Bial, alongside Washington Finance and Economics President Rajeev Bhattacharya and former Paul, Weiss visiting lawyer Alex Evans, co-authored a study on the legal framework for the analysis of market efficiency in securities class actions, published in the Journal of International Business & Law.

In the paper, “It Is Imperative to Perform Event Studies Only With High-Frequency Intraday Data for Securities Litigations and Valuations,” published on December 31, the authors challenge the conventional wisdom that the effect of a significant event on a listed company’s value can be measured by analyzing changes in daily or even lower-frequency stock price data. Instead, they demonstrate that the effect typically lasts only a few hours, such that use of longer-term data risks mischaracterizing the event’s impact, including by conflating the effects of other unrelated events. The authors also stress the importance of avoiding ad hoc subjective judgments as to whether an event is “good” or “bad” news for the company.

» read the paper