Researcher ORCID Identifier
0009-0003-9512-8065
Graduation Year
2024
Date of Submission
12-2023
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Eric Hughson
Abstract
Following the unprecedented collapse of Silicon Valley Bank (SVB) in March 2023, this study explores abnormal stock price reactions within the biotechnology sector. As the chosen financial institution for countless Silicon Valley-type technology and healthcare firms, SVB's failure had a profound impact on small to mid-sized biotech companies. Analyzing a dataset of 180 biotech firms during a two-day event window over SVB’s collapse, I investigate whether exposure to SVB, or other factors, was the primary contributor to negative abnormal stock price reactions, considering variables such as the percentage of cash held at SVB, whether a firm maintained an active SVB relationship, lead drug asset maturity, and market capitalization. Using event study methodology with univariate and multivariate regressions, my findings reveal that firms with active SVB relationships, especially smaller and early-stage entities, experienced more pronounced negative abnormal returns. These results not only emphasize the vulnerabilities of biotech companies tied to financial institutions like SVB but also offer insight on the interplay between market dynamics and institutional failures.
Recommended Citation
Kent, Spencer, "Bio-Bust: Investigating Biotech Stock Factors Contributing to Abnormal Returns in the Wake of Silicon Valley Bank's Failure" (2024). CMC Senior Theses. 3458.
https://scholarship.claremont.edu/cmc_theses/3458
Included in
Biotechnology Commons, Finance and Financial Management Commons, Portfolio and Security Analysis Commons
