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

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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: Event study; Interfirm cooperation; Pharmaceutical industry

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/10438590600661764

Affiliations: 1: CERENE, Faculté des Affaires Internationales, University of Le Havre, Le Havre, France 2: BETA-Universités de Nancy and CNRS, Nancy, France

Publication date: January 1, 2007

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