Inderscience Publishers

Information management and the profitability of firms in the field of medical technology

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This study examines the connection between the profitability of the firm and the different forms of new-product-related information released, in the pharmaceutical and related industries, while the product is still under development. We classify new-product-related information into such categories as preannouncements, announcements, detailed and non-detailed and examine the stock market's reaction when a firm releases such information. The results show that there is a statistically significant market reaction to detailed announcements (t-value = 2.07, p = .04) and announcements that receive extensive press coverage (t-value = 2.92, p = .00). No such reaction was, however, found for preannouncements. The results suggest that managers of firms in the field of medical technology could enhance the value of the firm by releasing detailed announcements on innovative activities as opposed to preannouncing.

Keywords: new products, preannouncements, announcements, medical technology, event study methodology

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