R&D Stages and Stock Price Reactions in the Japanese Market

This paper investigates how stock markets react to the release of R&D-related news by studying stock price data for firms listed on the first section of the Tokyo Stock Exchange between 2000 and 2006. If information uncertainty is the major cause of the post-announcement drift, post-announcement drift should decrease with R&D progress. Our results show that late-stage R&D announcements increase stock prices. The post-announcement drift tends to decrease with R&D progress for late-stage R&D news. For pharmaceutical industry, the negative association between drift and R&D progress is obtained for most R&D stages