Researcher ORCID Identifier

0009-0009-6437-2552

Graduation Year

2026

Date of Submission

4-2026

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Professor Peter Kelly

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2026 Mingyu Liu

Abstract

The success of biotech companies is fueled by their ability to conduct clinical trials that are crucial for the clinical validation of a company. While prior literature has examined how clinical trial results affect the announcing company’s stock price, relatively little is known about how these announcements affect competitors. This thesis examines the effect of early-stage clinical trial results on competitor stock prices using a hand-collected dataset of Phase I and Phase I/II clinical trial announcements from 2022 to 2024. Using a five-day cumulative abnormal return (“CAR”) event study methodology, I investigate the presence of information spillover or competitive technological race effects through variables such as shared mechanisms of action, drug target, or same drug target indication. The results suggest that early-stage clinical trial announcements produce both effects: competitors targeting the same indication experience negative cumulative abnormal returns, while competitors with some technological overlap experience positive cumulative abnormal returns. These findings suggest that early-stage clinical trial results can signal intensified competition within direct competition channels while also transmitting broader clinically validating information across therapeutic areas.

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