재무연구 제 권 호 (2019년 11월)
Asian Review of Financial Research, Vol., No..
pp.89~105
pp.89~105
Negative Spillover in Biotech Industry : Evidence from 2019 Bio-collapse in Korea
Yonghyun Kwon Changwon National University, College of Economics & Business
Seung Hun Han Korea Advanced Institute of Science and Technology (KAIST), College of Business, School of Business and Technology Management
This study examines the negative spillover in biotech industry. Using the event study method, we empirically show the effect of SillaJen’s failure of global phase III clinical trials by investigating stock market reactions. After only six days of announcing the failure, Cumulative Abnormal Returns (CARs) of SillaJen is -90.3%. In this study, we consider about the negative spillover to the other firms. Although SillaJen’s failure cannot affect their own business, CARs of biotech companies are also negatively affected by the R&D failure announcement. Especially, short-term average CARs of research-intensive biotech firms are more negatively affected by the announcement than that of pharmaceutical companies. However, the empirical result suggests that negative expectations about biotech industry spills over into traditional pharmaceutical industry with time.
Yonghyun Kwon
Seung Hun Han
This study examines the negative spillover in biotech industry. Using the event study method, we empirically show the effect of SillaJen’s failure of global phase III clinical trials by investigating stock market reactions. After only six days of announcing the failure, Cumulative Abnormal Returns (CARs) of SillaJen is -90.3%. In this study, we consider about the negative spillover to the other firms. Although SillaJen’s failure cannot affect their own business, CARs of biotech companies are also negatively affected by the R&D failure announcement. Especially, short-term average CARs of research-intensive biotech firms are more negatively affected by the announcement than that of pharmaceutical companies. However, the empirical result suggests that negative expectations about biotech industry spills over into traditional pharmaceutical industry with time.
