Graduation Year

Fall 2010

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Eric Hughson


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.