Valuation implications of pharmaceutical companies' R&D regulatory approval notifications

Hamill, P.A., McIlkenny, P. and Opong, K.K. (2013) Valuation implications of pharmaceutical companies' R&D regulatory approval notifications. British Accounting Review, 45(2), pp. 99-111. (doi: 10.1016/

71229.pdf - Accepted Version



This paper examines shareholder wealth effects surrounding applications to, and approvals by, the United States Food and Drug Administration (FDA) for firms listed on the New York (NYSE) and London (LSE) stock exchanges. Applications to the FDA for drug approvals significantly increase shareholder wealth for NYSE firms only. The increase is driven by applications for enhancements to existing drugs, with the market anticipating the application, thus suggesting information leakage. FDA approvals also significantly increase shareholder wealth in both markets. However, there is no evidence of information leakage and the significant post-event abnormal returns support the attention-grabbing hypothesis. Enhanced drug approvals are value-relevant for both markets, which highlights the contribution of real-options to firm value.

Item Type:Articles
Additional Information:NOTICE: this is the author’s version of a work that was accepted for publication in British Accounting Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in British Accounting Review 45(2), 2013. DOI: 10.1016/
Glasgow Author(s) Enlighten ID:Opong, Professor Kwaku
Authors: Hamill, P.A., McIlkenny, P., and Opong, K.K.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:British Accounting Review
ISSN (Online):1095-8347
Published Online:01 April 2013
Copyright Holders:Copyright © 2013 2013 Elsevier Ltd.
First Published:First published in British Accounting Review 45(2):99-111
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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