The Short-term Impact Of Drug Recall Events On Stock Price Of Listed Of Pharmaceutical Company

Drug safety concerns the national economy and people’s livelihood.It not only concerns the national health and life safety,but also affects the country’s economic development and social stability.It plays an important role in the whole social life.In recent years,drug safety incidents frequently occurred,causing consumers and patients to worry about and lose confidence in the safety and efficacy of drugs,which will also cause social and economic unrest.In particular,the stock prices of listed drug companies involved will be highly concerned,which is one of the research focuses of current event research methods.Based on Efficient Market Theory,Asymmetry Information Theory,Primacy effect and Situational Crisis Communication Theory,the paper studies the listed pharmaceutical enterprises that have drug recall events between 2007 and 2018,and use the Event Study method to study the impact of drug recall events on the volatility of the stock price of the drug involved.Through the parametric method of ANOVA and LSD to test enterprise response to events,the nature of enterprise,the enterprise’s past negative factors such as the nature of history and recall affect drug firms listed on stock price.Finally,by establishing the regression model,the impact of factors such as the response mode of the event,the duration of the response,the nature of the enterprise,the negative history of the enterprise and the nature of the recall event on the stock price of listed pharmaceutical enterprises is analyzed in depth.The results show that the recall event has a significant negative impact on the stock price of the drug involved,and the negative impact on the stock price of the company will last until the 20 th day after the event.The more timely a company’s attitude towards the recall and its response to the recall,the less negative impact it will have on its stock price.The response announcement of the listed company concerned to the drug recall event should be issued quickly,and the positive news should be released more,which can reduce the negative impact of the recall event on the stock price of the company.