The purpose of this article is to measure the efficiency of pharmaceutical firms and identify their determinants using Korean and American samples from 1992 to 2004. We document some stylized facts in the patterns and sources of efficiency change in Korean and American pharmaceutical firms. The evidence shows that ownership structure can substantially influence the efficiency of pharmaceutical firms. Especially, institutional ownership rate affects corporate efficiencies negatively, corroborating the myopic institutional investor hypothesis. The hypothesis is supported by both Korean and American samples. However, we find evidence that foreign ownership in Korea promotes efficiency of pharmaceutical firms. It is shown that R&D intensity is positively related to contemporaneous largest ownership rate and prior foreign ownership rate in Korean pharmaceutical firms. In contrast, little evidence is found on the relationship between ownership structure and R&D intensity in the American pharmaceutical industry. These empirical results are robust even after we check the causal links among efficiency, R&D and ownership.
No Reference information available - sign in for access.
No Citation information available - sign in for access.
No Supplementary Data.
Document Type: Research Article
Department of Business, Myongji College, Seoul 120-776, Korea
Department of Finance, College of Business Administration, California State University, Long Beach, CA 90840, USA
Department of Finance, Kent, OH 44242, USA
Publication date: 2010-07-01
More about this publication?