EVENT STUDY REPORT (WD-40 COMPANY)

<span>This report investigates the influence of firm-specific information events, earnings announcements and dividend declarations, on the stock prices of WD-40 Company. By employing the event study methodology, the analysis measures abnormal returns and cumulative abnormal returns to understand market reactions to these information events. The analysis focuses on four major events within 2023 and 2024: two quarterly financial results, one fiscal year financial report, and two dividend declarations. The primary objective is to determine whether these firm-specific events led to significant changes in stock prices. Key empirical questions include: (1) Do stock prices adjust immediately following the announcement of positive quarterly financial results? (2) How does the rate of adjustment in stock prices differ between dividend declarations and earnings announcements? (3) Do dividend declarations impact stock prices more significantly than earnings announcements? (4) Is the stock market's reaction to increased dividends proportional to the dividend increase? The study collected three years of daily stock price data for WD-40 Company and the NASDAQ Composite Index as the market benchmark. The market model was used to estimate expected returns, from which abnormal returns were calculated. All Ordinary Least Squares assumptions (OLS) were validated, tests for coefficient stability confirmed the stability of the regression coefficients, and a 15-day event window (-7 to +7 days) was employed to capture both pre-event and post-event effects. Statistical tests including t-test, and robustness tests for estimation periods and event window widths affirmed the reliability and validity of the findings. No problematic data issues were encountered. The findings reveal that quarterly financial results caused immediate and significant changes in stock prices, reflecting rapid adjustment in line with the semi-strong form of the Efficient Market Hypothesis (EMH). Dividend declarations also impacted stock prices though with slower and more moderate effects. Earnings announcements had a more immediate and stronger impact than dividend declarations. Stock price responses to dividend increases were not strictly proportional to the magnitude of the dividend change, indicating external market factors like market sentiment at play.</span>