Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
958469 | Journal of Empirical Finance | 2012 | 13 Pages |
Abstract
We analyze the relationship between positive stock returns, changes in trading activities, and liquidity improvements following drug approval announcements. Using a unique hand-collected data set on approval decisions in Europe, we find that stock liquidity does change. Stocks temporarily exhibit strong abnormal trading volume, lower spreads, and permanently become more liquid. Our results suggest that the initial positive wealth effect of a new drug release reflects both positive information content and liquidity improvements.
► We analyze liquidity effects following new drug approvals. ► We use a unique hand-collected data set on new drug approvals in Europe. ► Companies exhibit abnormal stock returns and stock liquidity improvements.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Achim Himmelmann, Dirk Schiereck,