Statistical models can make all the difference

Statistical models can make all the difference

 
Just how important are statistical models?   Just take a look at some recent cases where effective statistical analysis, including market event studies, became the “make or break” evidence, especially in cases concerning securities litigation and lost profit/economic damages:
 
 
  • Sophisticated event study shows efficient market and convinces court to certify class of litigants in a “fraud on the market” theory; In re Xcelera.com Securities Litigation,* 2005 U.S. App. LEXIS 27174 (1st Cir. 2005)
 
 
  • Delaware Chancery Court favors “shared synergies” and actuarial analysis in the fair value appraisal of an insurance conglomerate’s merger; Highfields Capital, Ltd. v. AXA Financial, Inc.*, 2007 Del. Ch. LEXIS 126 (Del. Ch. 2007)
 
  • Federal court defines market efficiency, the five factors that prove it—and the statistical financial analysis that does (and does not) meet the burden of proof; In re Polymedica Corporation Securities Litigation,* 2006 U.S. Dist. LEXIS 70079 (D. Mass. 2006)
 
 
 
The last case was—until its reversal for lack of reliable statistical evidence, the largest jury award for economic damages ever.  All of these case—especially in light of the securities and loss litigation that is certain to come out of the current economic spiral—demonstrate just how important it is for valuation analysts to present compelling and understandable statistical models to a judge or jury (and assist their attorneys in preparing the evidence for deposition and trial).
 
To refresh and refine your use of statistical models, regression analysis, and market event studies, be sure to tune into BVR’s next teleconference, “Compelling Statistical Evidence: Mining, Modeling, and Presenting Quantitative Financial Evidence to Juries,” featuring William Kennedy, Ph.D, CPA/ABV of St. Louis’ Anders Minkler & Diehl, LLP, and Jeffrey Dorman, Esq. with the Chicago office of law firm Freeborn & Peters, LLP.  The teleconference takes place Wednesday October 22, 2008; to register, click here
 
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