Technology Transactions, Announcement Effect, and Reversal: Dissecting an Anomaly
The Quarterly Review of Economics and Finance, 54 (3): 371-381.
Posted: 26 Feb 2019
Date Written: Summer 2013
Abstract
We examine the short term stock price performance of firms that acquire or sell technology rights. We find significant positive announcement-period abnormal returns to the acquirers and sellers. However, the price increases reverse during the subsequent twenty trading days. We also find that the reversal is confined to a subsample comprised of stocks that witness pre-announcement price decline. Stocks that witness price run-up prior to the announcement do not reverse to original prices but lose the momentum right after the announcement-period. We believe this is caused by the combination effect of the momentum prior to-and the impact of the announcement.
Keywords: Market Efficiency; R&D Investment; Intellectual Property Rights
JEL Classification: G14; G31; O34
Suggested Citation: Suggested Citation
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