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Using the event study method in logistics and supply chain research

The other day I had an article published in the International Journal of Applied Logistics, entitled: “The Event Study Method in Logistics Research: Overview and a Critical Analysis,” authored with Jason X. Wang. In the article, we provide an overview of the event study method, with a particular focus on the different statistical tests of significance used to evaluate abnormal returns as there is a range of test statistics but there seems to be some confusion amongst management scholars on which are best to use under which circumstances. We also provide an overview of some existing research using event study method in leading logistics journals, focusing on common elements and their focus. The review of existing articles demonstrates a range of different topics that can be addressed using event studies and also highlights some areas for improvement for scholars using the method in this research discipline. Finally, we spend some time examining possible research problems where the use of event studies could provide significant benefit and help develop further insight. Jason and I hope that the article is helpful and useful to readers.


Wood, L. C., & Wang, J. X. (2018) The event study method in logistics research: Overview and a critical analysis. International Journal of Applied Logistics, 8(1), 57-79.


International Journal of Applied Logistics 8(2) has been released

The International Journal of Applied Logistics has released volume 8, issue 2. This consists of four articles:

  1. The Reverse Logistics of Cross-Border e-Tailing in Europe: Developing a Research Agenda to Assess the Environmental Impacts
  2. Overlaying Human Resources Principles to the Goal: A Research Note
  3. Challenges Facing Humanitarian Logistics in a Nonprofit Organization
  4. The Event Study Method in Logistics Research: Overview and a Critical Analysis

The collection of articles demonstrates the international breadth of logistics challenges around the globe, from environmental impacts of e-tailing in Europe through to humanitarian challenges in Africa. I hope you find the research interesting and useful!

Participation in the Wool Innovation day

A great big thanks to the team behind the Wool Innovation day held a couple of weeks ago in Christchurch, New Zealand. They gathered a range of participants from over the country with interest in technology and innovation + an enthusiasm for wool! It was a pleasure to be part of the forum and, I hope, have contributed to the progression of the industry and products. It was very pleasing to have an invitation to the event and be able to participate.

A design thinking approach was used to develop and assess several ideas. The participants all had a great deal of fun and everyone came away richer for the experience.

I will be watching this space with interest to see how the ideas develop!

Our research published on the operational influences on the stock market reaction to toy recalls

The effect of slack, diversification, and time to recall on stock market reaction to toy recalls

My team and I have just had our research accepted into the International Journal of Production Economics after several rigorous reviews and revisions – published as Wood, Wang, Olesen, and Reiners (2017). The article is titled: The effect of slack, diversification, and time to recall on stock market reaction to toy recalls

In this work, we used event study methodology, which has been used in the Operations Management literature to study demand-supply mismatches (Hendricks & Singhal, 2009), medical device recalls (Thirumalai & Sinha, 2011), product introduction delays (Hendricks & Singhal, 2008), and food recalls (Salin & Hooker, 2001) among other topics. The calculations gave us an abnormal return value for each event that we then used in a cross-sectional regression to test a series of hypotheses that relate to the operational decisions that managers can make. Specifically, we were looking at geographic and business diversification; financial, inventory, and capacity slack; how long a product is on the market for before it is recalled; and whether reactions to the recalls change appreciably over time.


Past toy recalls have led to an increase in consumer concerns while toy manufacturers and retailers increasingly outsource and create longer supply chains, making it more challenging for them to ensure toy safety. This article examines firms making toy recall announcements to assess the impact operational characteristics have on the negative stock market reaction to the announcement. 135 toy recall announcements in the U.S. from 1979 to 2016 were analyzed using event study and cross-sectional regression. While a toy recall announcement results in a negative stock market reaction, our results show that greater levels of business diversification, inventory slack, and a longer time to recall are all associated with a less negative stock market reaction. In contrast, greater capacity slack is associated with a more negative stock market reaction. We find no evidence that geographic diversification or financial slack influences the stock market reaction, nor have reactions changed appreciably over time. This article contributes to the product harm and product recall literature by focusing on these operational elements. Managers should be aware of the benefits of greater slack and business diversification while planning their business, and the impact of a longer time to recall.

Video abstract/overview:



Hendricks, K. B., & Singhal, V. R. (2008). The effect of product introduction delays on operating performance. Management Science, 54(5), 878–892.

Hendricks, K. B., & Singhal, V. R. (2009). Demand-supply mismatches and stock market reaction: Evidence from excess inventory announcements. Manufacturing & Service Operations Management, 11(3), 509–524.

Salin, V., & Hooker, N. H. (2001). Stock market reaction to food recalls. Review of Agricultural Economics, 23(1), 33–46.

Thirumalai, S., & Sinha, K. K. (2011). Product recalls in the medical device industry: An empirical exploration of the sources and financial consequences. Management Science, 57(2), 376–392.

Wood, L. C., Wang, J. X., Olesen, K., & Reiners, T. (2017). The effect of slack, diversification, and time to recall on stock market reaction to toy recalls. International Journal of Production Economics, 193, 244–258.

Exam week

End of the biggest week for exams that I’ve had in quite a while. Big congrats to my Operations Management students at AUT who worked through their 3-hour, short-answer examination. My hope is that this challenged the cohort sufficiently

And it wasn’t just my students that engaged in their examinations – I was also sitting one on Sunday morning from 2-5am. I have to admit – this isn’t the greatest time of day for me to work. The exam was the Certified Demand Driven Planner programme (CDDP) administered by ICEA. Why the odd hours? It’s administered from the USA where I understand it was a more reasonable hour. An iProctor monitors a video feed for up to 5 candidates to ensure they are alone, not referring to books, etc. It was a multi-choice question exam. Now, I have my beef with this type of assessment but one outcome is pretty awesome: there is no wait to find out how you are did; an instant score is generated (in my case, slightly incorrect as one of my questions did not have an image in the question, making it impossible to answer!).

All up, a tough examination week for both myself and my students. I think we’re all breathing a sigh of relief.

The nexus between research and teaching

We hear plenty about research-informed teaching from Deans and accreditation bodies. To some faculty it all seems meaningless, hot-air-fuelled nonsense. Is it?

In their publication “Faculty Research Productivity and Standardized Student Learning Outcomes in a University Teaching Environment”, Galbraith and Merrill note that “…it was found that faculty research activity is positively and significantly related to teaching effectiveness …”

While many research studies focus on the evaluation of student evaluations as a measure of teaching effectiveness, Galbraith and Merrill took care to measure learning outcomes using standardised student learning outcome measure in a more robust and defensible way.

If you look around, while there are strong drivers to promote faculty to be more research active, in Australasia many faculty still don’t get fully engaged in research. Those that are tend to be extremely self-motivated folk. The same self-motivation may also manifest itself as a keen and careful teacher, generating the improved learning outcomes in the study.

Regardless, an interesting finding that does validate the belief that those engaged in research have a lot of interesting things to say about their subject and possess plenty of passion to inspire their students…

Assurance of supply and food security – essential in the 21st century

Do you want fries with your horse meat burger?

Supply chains are funny things. Firms often take the word of their trading partners that everything is as they say it is. Supplies and materials are infrequently checked.

As a result, something as simple as ‘meat’ can be supplied, used, and sold for a while before anyone notices that anything is amiss.

Horse meat burgers? Possibly not a problem, except when the meat has been labelled as ‘Beef’. Hm. So – Irish company, supplying ‘beef’ that isn’t beef and instead horse meat. Sure, horse meat is vastly cheaper – but they’d have to think that they’d be caught out. Possibly the manufacturer of the hamburger patties was caught out with faulty supplies? But why wasn’t the different meat noticed? Why did it take such a long time for someone to pick it up?

Security of supply and being able to assure consumers that everything in the supply chain is OK is becoming an increasingly important competitive advantage, rooted in supply chain management. Being able to verify materials and provide assurance is particularly crucial in the food and beverage industries.

Just in the Western world?

Hell no – this is important everywhere. While in Hong Kong the other year I was having a meal in Mc Donalds (YES – even my students told me that this was stupid! I’ve since been and tried a variety of local meals and foods and enjoyed most of it!). While munching the food, I noticed that McD was advertising (on the paper sheet on the plastic tray) that they have complete visibility over their chicken supply chain, assuring consumers that the meat was safe, compliant with regulations, and was generally GREAT to eat. Trust McD. In this case, with a strong firm in the chain, sourcing from a few major firms to make a small range of food in the restaurant, there is probably better chances that McD is doing a good job, much more so than a supermarket chain like Tesco is doing a good job of making sure that there is no horse meat in meat patties from one supplier (how many SKUs does Tesco have? Probably upwards of 40,000!).

Burger King – stopped using the horse meat pattie supplier. You would have thought that Burger King would likewise have been able to provide assurance that their materials were ‘good’ and trustworthy … hm….

Food – assurance of supply and security of supply is crucial. Welcome to 21st century supply chains.

nDiVE – the start of an AWESOME project in supply chain education

Welcome to 2013 and the first day of a 24-month project to improve operations and supply chain management education – the nDiVE project ( and nDiVE is all about representing more data and information within a virtual environment to enable learners to better understand supply chain complexity, particularly where there is a separation of time and/or space between the cause-and-effect. This can be particularly pertinent in supply chain quality or health and safety. We are improving authenticity, allowing students to get a taste of real-working environments in a way that is entirely safe, and supporting their effective education. We have a range of colleagues from around the world working on this, experts in authentic learning, virtual environments, simulation, and business education.

This is going to be an awesome project and it should change the way that supply chain management education is approached, both within a tertiary environment and, we hope, later also within the corporate training environment.

nDiVE – the first day of an awesome project

This is the first day of a 24-month project to improve operations and supply chain management education – the nDiVE project ( and In essence – the objective is to represent more data and information within a virtual environment to enable learners to better understand supply chain complexity, particularly where there is a separation of time and/or space between the cause-and-effect. This can be particularly pertinent in supply chain quality or health and safety.

Watch this space – it should be an interesting 24-month project improving operations and supply chain education.