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Regulatory Events and Biotech Firm Share Prices

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  • Erik Dohlman
  • Thomas Hall
  • Agapi Somwaru

Abstract

Using the "event study" method, we measure the impact on agricultural biotechnology firm equity values of new regulations and other limitations placed on the marketing of biotech crops. Unanticipated declines to biotech firm stock prices indicate that newly imposed regulatory restrictions appear most likely to diminish profit expectations for these firms. The stock price reaction to decisions by crop handlers, processors, or retailers to segregate or limit the use of biotech crops and to reports questioning their safety are less pronounced. Incentives to engage in new biotech crop research and development may be diminished by these developments. Copyright 2002, Oxford University Press.

Suggested Citation

  • Erik Dohlman & Thomas Hall & Agapi Somwaru, 2002. "Regulatory Events and Biotech Firm Share Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 24(1), pages 108-122.
    • Handle: RePEc:oup:revage:v:24:y:2002:i:1:p:108-122
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    File URL: http://hdl.handle.net/10.1111/1058-7195.00008
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    1. Véronique Bastin & Georges Hübner, 2006. "Concentrated Announcements on Clustered Data: An Event Study on Biotechnology Stocks," Financial Management, Financial Management Association International, vol. 35(1), pages 129-157, March.
    2. Carter, Colin A. & Smith, Aaron D., 2004. "The Market Effect of a Food Scare: The Case of Genetically Modified StarLink Corn," Working Papers 11997, University of California, Davis, Department of Agricultural and Resource Economics.
    3. Manoj Anand & Jagandeep Singh, 2018. "Impact of Automobile Regulations on Shareholders’ Wealth: Indian Empirical Evidence," Metamorphosis: A Journal of Management Research, , vol. 17(1), pages 28-40, June.
    4. Colin A. Carter & Aaron Smith, 2007. "Estimating the Market Effect of a Food Scare: The Case of Genetically Modified StarLink Corn," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 522-533, August.

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