Three essays in empirical finance on high-technology firms
Essay I: The influence of asymmetric information on biotechnology firms' source of funding. The primary source of post-IPO funding for biotechnology firms consists of public investors and pharmaceutical firms. Pharmaceutical firms, with their operational ties and strong research foundation, are hypothesized to be the better informed investors in biotechnology firms. Statistical analysis demonstrates that the timing of pharmaceutical funding is not as strongly influenced by informational problems/asymmetries as public funding. One main finding is that pharmaceutical firms are more likely than the public to fund a biotechnology firm whose therapeutic product was recently rejected by the FDA. By examining pharmaceutical funding associated with alliance contracts between pharmaceutical firms and biotechnology firms, this paper emphasizes the importance and viability of non-financial corporate funding. Essay II: The impact of Food and Drug Administration's approval process on the market. This paper studies the market reaction of biotechnology firms to events related to Food and Drug Administration product approval. In many cases if a product fails to win FDA approval, much of the previous research and patents become worthless. In essence, the market value of research and development stock and patent stock is largely dependent on research results and the FDA's decisions. This paper shows that the market value of biotechnology firms' intangible assets are influenced not only by their own research developments, but also by the product development process of other firms employing similar scientific methodology. Essay III: Patent citations as an indicator of the value of intangible assets in the semiconductor industry. The market value of a firm is largely determined by the expected returns to the firm's tangible and intangible assets. In high technology industries, such as the semiconductor industry, valuing a firm's intangible assets requires the valuation of its technological capital. Past studies have relied heavily on simple patent counts and research and development expenditures to quantify the technological component of a firm's intangible assets. This paper considers an additional data source, patent citations, and finds that stock variables created from citation data contain relevant information about the market's valuation of intangible assets.
|Year of publication:||
|Authors:||Shane, Hilary Lea|
|Type of publication:||Other|
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