TECHNOLOGY, COOPERATION AND STOCK MARKET VALUE: AN EVENT STUDY OF NEW PARTNERSHIP ANNOUNCEMENTS IN THE BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES

We use the event study methodology to investigate the share price responses to the formation of 281 partnerships in the biotechnology/pharmaceutical industry over the years 1995-2000. The average stock price response is positive, more so than in previous empirical works, which could be interpreted as evidence that interfirm collaboration is particularly valuable in high-technology industries. Research and development (R&D) partnerships also generate higher abnormal returns (relative to production or marketing agreements). On average, smaller firms in the partnership seem to appropriate a very significant share of the cooperative surplus, especially when they receive large technology payments or when the partnership is concluded in the R&D stage. On the other hand, partnership announcements of more profitable firms tend to be associated with higher abnormal returns.