Wealth Effect of Drug Withdrawals on Firms and Their Competitors

Ahmed, Parvez; Gardella, John; Nanda, Sudhir

doi:10.2307/3666313

Cited by 50 publications

(25 citation statements)

References 21 publications

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“…For two other drug classes there appears to be evidence of competitive benefits, which is consistent with the stock price studies of Ahmed et al (2002) and Dowdell et al (1992). The use of non-withdrawn heartburn medications is 53.7 percent more likely one year after the withdrawal of Propulsid than the year before withdrawal.…”

Section: Mepssupporting

confidence: 68%

“…Some papers in that literature document negative spillovers (Jarrell and Peltzman, 1985) while others document competitive benefits (e.g. Ahmed et al, 2002;Dowdell et al 1992). Our results vary by drug class.…”

Section: Discussionmentioning

confidence: 99%

“…Ahmed, Gardella and Nanda (2002) find that competitors' share prices rose significantly five days after the announcements of drug withdrawals that occurred between 1966. Dowdell, Govindaraj, and Jain (1992 find that in the wake of the Tylenol poisonings, the share prices of rival pharmaceutical manufacturers rose relative to the share price of the manufacturer of…”

Section: Conceptual Frameworkmentioning

confidence: 99%

“…Interestingly, some stock price studies of drug withdrawals find competitive benefits (Ahmed et al, 2002;Dowdell et al 1992) while another finds negative spillovers (Jarrell and Peltzman, 1985). A further study finds no net effect of drug withdrawals on the share prices of rival pharmaceutical firms (Dranove and Olsen, 1994).…”

mentioning

confidence: 99%

“…Moreover, the related literature implies divergent predictions. Studies of short-run changes in the stock prices of rival firms following drug withdrawals have found evidence of both positive and negative effects (Jarrell and Peltzman 1985;Dowdell et al 1992;Ahmed et al 2002).…”

Section: Introductionmentioning

confidence: 99%

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The Competitive Effects of Drug Withdrawals

Cawley

Rizzo

2005

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In September 1997, the anti-obesity drugs Pondimin and Redux, ingredients in the popular drug combination fen-phen, were withdrawn from the market for causing potentially fatal side effects.That event provides an opportunity for studying how consumers respond to drug withdrawals. In theory, remaining drugs in the therapeutic class could enjoy competitive benefits, or suffer negative spillovers, from the withdrawal of a competing drug. Our findings suggest that, while the withdrawal of a rival drug may impose negative spillovers in the form of higher patient quit rates, on the whole non-withdrawn drugs in the same therapeutic class enjoy competitive benefits in the form of higher utilization.

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Section: Mepssupporting

confidence: 68%

Section: Discussionmentioning

confidence: 99%

Section: Conceptual Frameworkmentioning

confidence: 99%

mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The Competitive Effects of Drug Withdrawals

Cawley

Rizzo

2005

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Corporate Motivations of Product Recall Strategy: Exploring the Role of Corporate Social Responsibility in Stakeholder Engagement

Chang

2014

Corp Soc Responsibility Env

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Prior evidence shows voluntary recalls do not lead to better abnormal stock returns when compared with involuntary ones, although they intend to convey positive signals. This puzzling evidence can be attributed to the ignorance of information uncertainty associated with different product recall strategies. Because of the mixed managerial motives inherent in business strategy, voluntary recalls may involve greater information uncertainty than involuntary ones that prevent investors from receiving the intended positive messages. This paper argues that corporate social responsibility (CSR) establishes a firm's presence in stakeholder engagement and plays a crucial role in certifying information conveyed by voluntary product recalls. The findings suggest that firms with better CSR performance receive significantly greater firm value change than those with poor CSR performance upon the announcements of voluntary recalls. Besides, the CSR effect is mainly driven by the firm's engagement in technical CSR activities because of the direct dialogues with stakeholders caring about products. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment

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The Signaling Effects of the US Food and Drug Administration Fast‐Track Designation

et al. 2016

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Pharmaceutical firms are reluctant to disclose proprietary information about a drug's likelihood of approval by the U.S. Food and Drug Administration (FDA) for fear of losing their competitive advantage. Instead, firms may use signals, like the FDA fast-track designation, to indicate to investors the likelihood of a drug's approval. This analysis uses an event study methodology, with stock and market data from the Center for Research in Security Prices. The results show that the fast-track designation is a strong, positive signal to investors (1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015), but its strength has markedly decreased over time. Results also show that the signal is strongest for the smallest firms.

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Wealth Effect of Drug Withdrawals on Firms and Their Competitors

Cited by 50 publications

References 21 publications

The Competitive Effects of Drug Withdrawals

The Competitive Effects of Drug Withdrawals

Corporate Motivations of Product Recall Strategy: Exploring the Role of Corporate Social Responsibility in Stakeholder Engagement

The Signaling Effects of the US Food and Drug Administration Fast‐Track Designation

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