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Financial success in biotechnology: company age versus company science [An article from: Technovation]
Book Details
Author(s)G.S. McMillan, P. Thomas
PublisherElsevier
ISBN / ASINB000RR1S1G
ISBN-13978B000RR1S16
AvailabilityAvailable for download now
MarketplaceUnited States 🇺🇸
Description
This digital document is a journal article from Technovation, published by Elsevier in 2005. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.
Description:
The purpose of this research effort is to use the tenets of institutional theory to explore the relative stock market success of biotechnology companies. Previous research (Deng, Z., Lev, B., Narin, F., 1999. Science and technology as predictors of stock performance. Financial Analysts Journal 55(3), 20-32.) has highlighted the relationship between the quality of companies' technology, as measured using quantitative patent indicators, and their stock market valuation. Institutional theory (DiMaggio, P.J., Powell, W.W., 1983. The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. American Sociological Review 48, 147-160.) might suggest that there are many institutional outcomes that are decoupled from the actual activities of the organization. From this view, much of a firm's effort might involve signalling components, including the age of the company and other similar activities. Our results are that older companies have significantly higher stock market valuations, and that those companies had fewer PhD's as their Chief Executive Officers (CEOs). These findings suggest that the stock market often looks favourably upon older established biotechnology companies that are run by professional managers rather than pioneering scientists.
Description:
The purpose of this research effort is to use the tenets of institutional theory to explore the relative stock market success of biotechnology companies. Previous research (Deng, Z., Lev, B., Narin, F., 1999. Science and technology as predictors of stock performance. Financial Analysts Journal 55(3), 20-32.) has highlighted the relationship between the quality of companies' technology, as measured using quantitative patent indicators, and their stock market valuation. Institutional theory (DiMaggio, P.J., Powell, W.W., 1983. The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. American Sociological Review 48, 147-160.) might suggest that there are many institutional outcomes that are decoupled from the actual activities of the organization. From this view, much of a firm's effort might involve signalling components, including the age of the company and other similar activities. Our results are that older companies have significantly higher stock market valuations, and that those companies had fewer PhD's as their Chief Executive Officers (CEOs). These findings suggest that the stock market often looks favourably upon older established biotechnology companies that are run by professional managers rather than pioneering scientists.
