The Impact of FDA New Drug Approval on Abnormal Return of Nasdaq Biotech Stock

• Main Authors: Po Chang Chen, 陳柏昌
• Other Authors: Y. W. Shyu
• Format: Others
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/64978819916415095797

碩士 === 長庚大學 === 企業管理研究所 === 97 === We observe two kinds of stocks. One is the components of Nasdaq Biotechnology Index (hereafter, cNBI) and the other is components of Phlx Drug Index (hereafter, cRXS). This study use an event study methodology for calculating abnormal return (hereafter, AR) and cumulative abnormal return (hereafter, CAR) in the condition of FDA new drugs approvals. We use t-test to check whether AR differ from zero and use multiple regression model to examine whether some variables have influences in AR. We have three findings. First, AR of cNBI is significantly higher than zero, but AR of cRXS is not significantly different from zero. The second, CAR of cNBI is significantly higher than zero before FDA new drugs approvals 1~3 days, and CAR of cRXS is significantly higher than zero before FDA new drugs approvals 1~30 days. The last, we use multiple regression model to find some variables have influences in AR on the day of FDA new drugs approvals：market value in the end of last year has significantly negative relationship to AR of cNBI, and ratio of RD expense divides operation expense in the end of last year have significantly positive relationship to AR of cNBI, and ratio of RD expense divides market value in the end of last year have significantly positive relationship to AR of cNBI, and change of ratio of cash divides market value during last two fiscal year has significantly negative relationship to AR of cNBI, and ratio of RD expense divides operation expense in the end of last year have significantly positive relationship to AR of cRXS, and change of ratio of cash divides operation expense during last fiscal year has significantly negative relationship to AR of cRXS.