The event study methodology: a pathway to financial insights about service management

Purpose Executives and managers often seek to understand the financial impact of their decisions on the firm. However, most service research relies on perceptual and behavioral metrics, such as customer and employee satisfaction, engagement and purchase behavior, as outcome measures. Studies that examine the financial consequences of service management decisions are rare. This paper aims to promote the event study methodology in the service research community to better understand the impact of service management decisions on firm value. Design/methodology/approach This paper reports key literature on event studies in various fields. Moreover, this paper reports the results of a preregistered systematic literature review to identify existing event studies in the field of service management. Findings To date, the use of event studies in service research is limited, which is surprising given their great potential. To stimulate the use of event studies, we provide a roadmap for incorporating event studies into service research and conclude with a discussion on promising areas for future event study research. Originality/value This paper provides service researchers with a foundation for understanding how to demonstrate the short-term financial impact of service management decisions on firms using the event study methodology. We hope to encourage more service researchers to conduct event studies, as this methodology offers a relatively straightforward approach to illustrating the financial consequences of service management decisions and practices.