Voluntary Disclosure and its Impact on Share Prices: Evidence from the UK Biotechnology Sector

In the UK, SSAP 13 requires that firms immediately expense most of their R&D expenditures.The reported earnings of high-R&D expenditure firms are therefore likely to convey less valuerelevantinformation to investors than those of less research-intensive firms. Using a sample offirms from the high-R&D UK biotechnology/pharmaceutical sector, we find that earningsannouncements have a much lower price impact than drug development announcements. We alsofind that there are significantly more ‘good news’ voluntary announcements than ‘bad news’announcements....