Social and Behavioral Sciences Commons^™

The Impact Of Drug And Firm Attributes On Stock Price Movements Around Fda Drug Approval Decisions, Julian Donovan

2018 Undergraduate Awards

This paper evaluates the impact of firm and drug attributes on the stock price movements of drug companies before, during, and after a drug approval decision by the Food and Drug Administration (FDA). Previous literature demonstrates significant stock price volatility around these events on average, but do not explicitly examine if certain attributes can help explain this volatility for individual companies. In this paper, holding period returns and cumulative abnormal returns (obtained via the Fama-French model) are regressed on relevant firm and drug attributes. The findings suggest that the type of disease a drug treats has little impact on its …