Graduation Year
Fall 2010
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Eric Hughson
Abstract
I examine investors’ reaction to the announcement of mergers and acquisitions in the pharmaceutical and biotechnology industry from 2002 to 2008. Over this period, investors anticipate the announcements, as demonstrated by the fact that the cumulative abnormal returns are not statistically significant. In addition, I test to determine the effect of excess capacity on investors’ reactions. From 2002 to 2004, investors do not recognize acquisitions as a response to excess capacity, as the excess capacity measures utilized have no effect on the size of the cumulative abnormal return. From 2005 to 2008, however, excess capacity measures have a positive effect on cumulative abnormal return, indicating that investors started to recognize the threat of excess capacity and acquisitions as a response to that threat.
Recommended Citation
Volk, Jennifer M., "Do Investors View Excess Capacity as a Determinant of Mergers and Acquisitions in the Pharmaceutical and Biotechnology Industry?" (2010). CMC Senior Theses. 15.
https://scholarship.claremont.edu/cmc_theses/15
