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FDA approval announcements: Attention-grabbing or event-day misspecification?

Author

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  • Hamill, Philip A.
  • Hutchinson, Mark
  • Nguyen, Quang Minh Nhi
  • Mulcahy, Mark

Abstract

The attention-grabbing hypothesis has been offered as a behavioural explanation for post-event abnormal returns for FDA drug approval announcements for NYSE listed firms. We show that when event-day mis-specification is accounted for, the market reaction is centred on the event-day and that the increase in firm value is driven by after-market-close approval announcements.

Suggested Citation

  • Hamill, Philip A. & Hutchinson, Mark & Nguyen, Quang Minh Nhi & Mulcahy, Mark, 2018. "FDA approval announcements: Attention-grabbing or event-day misspecification?," Economics Letters, Elsevier, vol. 170(C), pages 171-174.
    • Handle: RePEc:eee:ecolet:v:170:y:2018:i:c:p:171-174
    DOI: 10.1016/j.econlet.2018.06.024
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    References listed on IDEAS

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    More about this item

    Keywords

    Research and Development; FDA; Attention-grabbing; Pharmaceuticals; Event study;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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