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Short on drugs: Short selling during the drug development process

Henk Berkman and Marco Eugster

Journal of Financial Markets, 2017, vol. 33, issue C, 102-123

Abstract: Announcements related to the drug development process can have a profound impact on the market value of firms operating in the pharmaceutical and healthcare industries. We examine a large number of these events and document a strong negative relation between short selling during the days leading up to an event's announcement and the announcement return. Several additional tests indicate that insider information is a likely source for at least part of this profitable trading activity.

Keywords: Short selling; Drug development; FDA announcements; Insider trading; Private information (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:finmar:v:33:y:2017:i:c:p:102-123