Related article: with the winner?s curse. Additionally, prior contact with the target firm through alliances gives the two firms an opportunity to ?learn? about each other?s research and also meet and work with key scientists and management. 14 In the current analysis, each acquiring firm has, on average, four prior alliances with the target firm prior to the acquisition. This contact should provide the acquiring firm with sufficient information regarding the human capital of the target firm. Combined, these pre-acquisition activities should provide enough information to the acquirer so that it ?knows what it is buying.? This type of organizational learning perspective is broadly similar to that suggested by Hayward (2002). In addition to providing information, Rothaermel (2001) finds that alliances with providers of new technologies are positively correlated with new product development for the incumbent firm and, in turn, new Antibiotic Cefixime product development is positively associated with firm performance. This finding is supported elsewhere in the literature, for example, Shan et al (1994) and Deeds and Hill (1997). Acquirers in the pharmaceutical industry are able to negotiate more effectively with the target firm when the exclusivity and patent horizon of their Dose Of Cefixime own product portfolios and their product pipelines are strong. We argue they undertake acquisitions to supplement their slowing 13 In fact, 82 percent of the acquisitions in the current project are ones that involve firms with complementary research. 14 Anand and Khanna (2000) show that firms can learn to create value as their alliance experience accumulates over time. 9 R&D productivity as evidenced by an increase in their Desperation Index (our unique quantitative measure of firm level desperation), which will be discussed more fully below. Firms are able to capture value Tablet Cefixime from their acquisition activities by improving their stock of knowledge or information about the target prior to the time of the Cefixime Antibiotic acquisition. As such, we make the following predictions: (1) the probability that a given firm undertakes a R&D acquisition will be Cefixime Tablet positively related its level of desperation just prior to an acquisition; (2) given that a firm makes an acquisition, the cumulative abnormal return, Cefixime Dispersible Tablets CAR, realized from the acquisition will be positively Cefixime Trihydrate related to the stock of information accumulated by the Dosage Of Cefixime acquirer in the period prior to an Cefixime Dosage acquisition; (3) the CAR realized from an acquisition will be negatively related to the acquirer?s level of desperation; (4) post-acquisition improvements in R&D productivity or pipeline health of an acquirer will be positively related to acquirer?s pre-acquisition information gathering activities; and, Cefixime Buy (5) post-acquisition improvements in pipeline health of an acquirer will be positively related to the acquirer?s level of desperation prior to an acquisition. 4.0 Cefixime Online Empirical Methodology and Data Sample 4.1 Empirical Methodology We use event study methodology to compute the cumulative abnormal returns around the time of the acquisition announcement. Acquisition dates for the sample were gathered from Securities Data Cefixime Ofloxacin Corporation Cefixime 400mg (SDC) and verified using publicly available media reports from The Wall Street Journal and other business publications. We Cefixime Tablets ran the event study utilizing an event Cefixime Dose window of three days. The three day window includes the day of the announcement as well as the day before and after. As a robustness check, we re-ran the event study utilizing a five day window. The five Buy Cefixime day window includes the three days prior to an acquisition announcement, the day of the announcement as well as the day after. Finally, we checked for confounding events for each transaction with The Wall Street Journal. 15 15 Major corporate events including: litigation, naming of new CEO or senior management, new product announcements, earnings and dividend announcements, major news relating to success or failure of a drug in clinical trials, rulings by the FDA and other mergers, joint venture or alliance announcements were considered confounding events. Firms for which confounding events are identified were excluded from our sample. 10 One of the challenges in analyzing mergers and acquisitions is to find appropriate measures of transactions success, in addition to the widely accepted cumulative abnormal returns. Healey, Palepu, and Ruback (1992) use post-acquisition accounting data to test directly for changes in operating performance that result from mergers. This approach would not be appropriate for the current analysis, because it overlooks the health of the acquiring company?s product pipeline, which represents potential future significant cash flows that are not Ofloxacin Cefixime recorded Cefixime 200 Mg in available accounting data. We examine two measures of acquisition success in addition to cumulative abnormal returns. First, we look at the Cefixime 200mg Tablets post-acquisition change in the product pipeline for the year following the acquisition. Cefixime 400 Mg We quantitatively measure each company?s