Stock Performance Differences in Swedish Life Science Companies with or without Research-based Science Park Affiliation

Abstract: Stock Performance Differences in Swedish Life Science Companies with or without Research-based Science Park Affiliation Seminar date 2018-06-01 Course BUSN 79 Business Administration: Degree Project in Accounting and Finance - Master Level, 15 ECTS Authors: Eric Isacsson and Liana Trichkova Advisor: Håkan Jankensgård Key words: Science park affiliation, university ownership, life science, long-term buyand- hold-abnormal return, short-term cumulative abnormal return. Purpose: The purpose of the study is to investigate if there is a difference in the publicly traded stock performance of science park affiliated and non-affiliated life science firms. As well as to assess if university ownership for science park affiliated life science firms influence shareholder returns. Methodology: A long-term event study analysis (BHAR) is conducted to examine if science park affiliated and non-affiliated life science firms realize different returns. The buy-and-hold abnormal return is used as a dependent variable in a regression analysis which allows to include the variables of interest - science park affiliation and university ownership measures. Additionally, a short-term event study analysis (CAR) is carried out, evaluating the response of the market to an event, joining a science park, as compared to the expected returns provided by the market model. Theoretical perspective: The study is based on theoretical insights regarding the effects of science parks on affiliated companies in a knowledge intensive environment. The contribution of the thesis comes from studying those effects from the financial markets perspective in Swedish life science firms. Empirical foundation: 170 IPOs of Swedish life science firms out of which 72 are affiliated with science parks and 98 non-affiliated. Conclusion: The results show that there are no long-term (36-month) abnormal returns from affiliation with a science park. University ownership has no abnormal return effect. A life science company that joins a science park experience a statistically significant positive stock return of 3 % on the day of the announcement.