Date of Award


Document Type


Degree Name

Bachelor of Arts




Over the past three decades, the Biotechnology and Pharmaceutical industry has had the largest growth rate of any sector in the U.S. economy. Currently, the largest 10 companies have a market cap of over 700 billion dollars. In the past 20 years, Biotech has outperformed the Standard and Poor’s 500 index earning superior returns for those willing to invest in this risky, high growth industry (Bloomberg L.P.). This upward trend is expected to continue as both institutional and private investment in biotech continues to soar.

A better understanding of the FDA approval process and the way a company’s stock price fluctuates in the time surrounding approvals can yield practitioners a unique advantage in their pursuit of profits. I hypothesize that biotechnology and pharmaceutical companies return data surrounding Phase III FDA approvals will mimic the announcement effects traditionally surrounding quarterly earnings. I also predict that less transparent firms will experience greater cumulative abnormal returns, yielding negative and significant coefficients on all three transparency measures: press releases one year prior to approval, analyst coverage, and the cumulative abnormal return associated with the firm’s regular quarterly earnings announcements.