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Short on drugs: Short selling during the drug development process

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  • Berkman, Henk
  • Eugster, Marco

Abstract

Announcements related to the drug development process can have a profound impact on the market value of firms operating in the pharmaceutical and healthcare industries. We examine a large number of these events and document a strong negative relation between short selling during the days leading up to an event's announcement and the announcement return. Several additional tests indicate that insider information is a likely source for at least part of this profitable trading activity.

Suggested Citation

  • Berkman, Henk & Eugster, Marco, 2017. "Short on drugs: Short selling during the drug development process," Journal of Financial Markets, Elsevier, vol. 33(C), pages 102-123.
    • Handle: RePEc:eee:finmar:v:33:y:2017:i:c:p:102-123
    DOI: 10.1016/j.finmar.2017.02.001
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