TECHNOLOGY, COOPERATION AND STOCK MARKET VALUE: AN EVENT STUDY OF NEW PARTNERSHIP ANNOUNCEMENTS IN THE BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES

Sandy Campart and Etienne Pfister

Economics of Innovation and New Technology, 2007, vol. 16, issue 1, 31-49

Abstract: We use the event study methodology to investigate the share price responses to the formation of 281 partnerships in the biotechnology/pharmaceutical industry over the years 1995-2000. The average stock price response is positive, more so than in previous empirical works, which could be interpreted as evidence that interfirm collaboration is particularly valuable in high-technology industries. Research and development (R&D) partnerships also generate higher abnormal returns (relative to production or marketing agreements). On average, smaller firms in the partnership seem to appropriate a very significant share of the cooperative surplus, especially when they receive large technology payments or when the partnership is concluded in the R&D stage. On the other hand, partnership announcements of more profitable firms tend to be associated with higher abnormal returns.

Keywords: Interfirm cooperation; Event study; Pharmaceutical industry (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1080/10438590600661764

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