By constructing a novel proprietary pharmaceutical database, we assessed whether the corporate transparency of Korean exchange-listed pharmaceutical companies affects event-study returns upon Korea Food and Drug Agency approvals of new drugs. The empirical findings are as follows: First, the evidence is that new drugs are priced in the announcement returns. Second, product innovation is appraised higher by the investors when the company is well-governed in terms of trading venue, R&D intensity, balance sheet variables, payout policy, valuation, and years of operation. Lastly, shareholders are wealthier with innovative new products promised by trustworthy managers.
Abstract
Ⅰ. Introduction
Ⅱ. Theories and Hypotheses
Ⅲ. Data and Methodology
Ⅳ. Empirical Results
Ⅴ. Conclusion
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