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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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  • Sandy Campart
  • Etienne Pfister

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.

Suggested Citation

  • Sandy Campart & Etienne Pfister, 2007. "Technology, Cooperation And Stock Market Value: An Event Study Of New Partnership Announcements In The Biotechnology And Pharmaceutical Industries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(1), pages 31-49.
    • Handle: RePEc:taf:ecinnt:v:16:y:2007:i:1:p:31-49
    DOI: 10.1080/10438590600661764
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    2. Antonelli, Cristiano & Teubal, Morris, 2008. "Venture Capital as a Mechanism for Knowledge Governance: New Markets and Innovation-Led Economic Growth," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200805, University of Turin.

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