Damages experts make occasional recourse to event studies:

Prior to Delaware District Court Judge Andrew’s ruling on the admissibility in a false statements case of four event studies conducted by a damages expert, the Government decided it would no longer pursue damages. Instead, it would offer the testimony of its expert, Dr. Alan Hess, who compared the relevant entity’s stock price before and after an alleged bad act, to prove the materiality of the alleged false claims.

While three of the four event studies were not excluded under Daubert, Judge Andrews concluded that a fourth failed to isolate reliable causality with regard to the specific bad acts at issue. Although Dr. Hess claimed he could have isolated that causal analysis, he did not do so.

The court also precluded Dr. Hess from presenting analysis comparing the financial performance of the relevant bank to its peers.

Critical takeaways from the order are 1) Event studies are admissible and helpful to a trier of fact; 2) Event studies that do not isolate the critical event are subject to exclusion, and 3) Industry reports and analysis on a stand-alone basis do not speak to the facts of a case, and are unlikely to survive Daubert.