The Impact of the Act for the Development of Biotech and New Pharmaceuticals Industry on Firm Value

• Main Authors: Hsieh, Chia-Yu, 謝佳妤
• Other Authors: Liang, Woan-Lih
• Format: Others
• Language: en_US
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/7kym2r

碩士 === 國立交通大學 === 財務金融研究所 === 107 === This study explores the impact of the “Act for the Development of Biotech and New Pharmaceuticals Industry” (the ACT) on firm value. We examine the impact from 2 perspectives: (I) intra-industry comparisons: the benefitted firms (firms approved for the ACT) are compared with the non-benefitted firms (II) inter-industry comparisons: biotechnology industry is compared with the high-technology industry. The data are collected from the TEJ database for the periods 2002-2017, and we use Tobin’s Q and B/M ratio as our proxies for firm value. This study employed the propensity score matching methods in conjunctions with the difference-in-differences methods for analysis, aiming for a less biased treatment effect. We also run the ordinary least squares regression to capture the ACT’s effect. The empirical results are as follows: (I) intra-industry comparisons: the benefitted firms are better off from the ACT and (II) inter-industry comparisons: the ACT is beneficial to the biotechnology industry. The empirical results support our hypothesis. To investigate the differences among subsample sections, we also split our data based on the criteria such as the category classification, Tobin's Q, and firm scale. The results of subsample analysis are as follows: (I) intra-industry analysis: biotechnology firms in the pharmaceutical category with small Tobin's Q can capture the positive effect of the ACT and (II) inter-industry analysis: firms with a smaller scale can capture the ACT’s positive effect. In summary, the ACT is helpful for both the benefitted biotechnology firms and the biotechnology industry, aligning with the legislative intent.