TECHNOLOGY, COOPERATION AND STOCK MARKET VALUE: AN EVENT STUDY OF NEW PARTNERSHIP ANNOUNCEMENTS IN THE BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES
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.
Document Type: Research Article
Publication date: 2007-01-01