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The outsourcing of R&D through acquisitions in the pharmaceutical industry

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  • Higgins, Matthew J.
  • Rodriguez, Daniel

Abstract

For acquisitions characterized by information asymmetries, we find evidence consistent with the proposition that acquirers are able to avoid the winner's curse. We examine the performance of acquirers of 160 biotechnology firms from 1994-2001 and find evidence that on average, the acquirers of biotech firms realize significant positive returns. These returns are positively correlated with acquirer access to information about the research and development activities at target firms and a superior negotiating position on the part of the acquirer. Further, we find that acquirers that use equity as payment realize significant positive returns.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 80 (2006)
Issue (Month): 2 (May)
Pages: 351-383

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Handle: RePEc:eee:jfinec:v:80:y:2006:i:2:p:351-383

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Web page: http://www.elsevier.com/locate/inca/505576

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References

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Citations

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Cited by:
  1. Hansen, Zeynep & Higgins, Matthew, 2007. "The Effect of Contractual Complexity on Technology Sourcing Agreements," MPRA Paper 4979, University Library of Munich, Germany.
  2. Carolin Haeussler & Matthew J. Higgins, 2012. "Explaining Preferences for Control Rights in Strategic Alliances: A Property Rights and Capabilities Perspective Approach," NBER Working Papers 18364, National Bureau of Economic Research, Inc.
  3. Ashish Arora & Alfonso Gambardella & Laura Magazzini & Fabio Pammolli, 2009. "A Breath of Fresh Air? Firm Type, Scale, Scope, and Selection Effects in Drug Development," Management Science, INFORMS, vol. 55(10), pages 1638-1653, October.
  4. Schön, Benjamin & Pyka, Andreas, 2013. "The success factors of technology-sourcing through mergers & acquisitions: An intuitive meta-analysis," FZID Discussion Papers 78-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  5. Woltering-Lamers, Philipp, 2011. "Die sequenzielle Organisationswahl: Kooperationen als Vorstufe von Akquisitionen," Arbeitspapiere 122, Westfälsche Wilhelms-Universität Münster (WWU), Institut für Genossenschaftswesen.
  6. Jerry Thursby & Marie Thursby, 2011. "University-industry linkages in nanotechnology and biotechnology: evidence on collaborative patterns for new methods of inventing," The Journal of Technology Transfer, Springer, vol. 36(6), pages 605-623, December.
  7. Peter Rousseau & Caleb Stroup, 2011. "Director Histories and the Pattern of Acquisitions," Vanderbilt University Department of Economics Working Papers 1124, Vanderbilt University Department of Economics.
  8. Frantzeskakis, Kyriakos & Ueda, Masako, 2007. "A Dynamic Equilibrium Model of Firm's Life Cycle and Mergers as Efficient Reallocation," CEPR Discussion Papers 6079, C.E.P.R. Discussion Papers.
  9. Stuart, Graham & Higgins, Matthew, 2007. "The Impact of Patenting on New Product Introductions in the Pharmaceutical Industry," MPRA Paper 4574, University Library of Munich, Germany.
  10. Povel, Paul & Sertsios, Giorgo, 2014. "Getting to know each other: The role of toeholds in acquisitions," Journal of Corporate Finance, Elsevier, vol. 26(C), pages 201-224.

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