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Voluntary disclosure and its impact on share prices: Evidence from the UK biotechnology sector

Dedman, Elisabeth, Lin, Stephen W.-J, Prakash, Arun J. and Chang, Chun-Hao (2008) Voluntary disclosure and its impact on share prices: Evidence from the UK biotechnology sector Journal of Accounting and Public Policy, 27 (3). pp. 195-216.

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Abstract

In the UK, SSAP 13 requires that firms immediately expense most of their R&D expenditures. The reported earnings of high-R&D expenditure firms are therefore likely to convey less value-relevant information to investors than those of less research-intensive firms. Using a sample of firms from the high-R&D UK biotechnology/pharmaceutical sector, we find that earnings announcements have a much lower price impact than drug development announcements. We also find that there are significantly more ‘good news’ voluntary announcements than ‘bad news’ announcements. Furthermore, our findings indicate that these firms are more likely to announce late than early stage developments, and that the pattern of disclosures, and the market’s reaction to them, varies between larger, dominant firms and their smaller counterparts.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
NameEmailORCID
Dedman, Elisabethe.dedman@surrey.ac.uk
Lin, Stephen W.-J
Prakash, Arun J.
Chang, Chun-Hao
Date : May 2008
DOI : 10.1016/j.jaccpubpol.2008.02.001
Uncontrolled Keywords : Voluntary disclosure; Firm strategy; Market reaction
Depositing User : Clive Harris
Date Deposited : 01 Jul 2019 13:34
Last Modified : 01 Jul 2019 13:34
URI: http://epubs.surrey.ac.uk/id/eprint/852194

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