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Contagious Speculation and a Cure for Cancer: A Nonevent That Made Stock Prices Soar

Gur Huberman and Tomer Regev
The Journal of Finance
Vol. 56, No. 1 (Feb., 2001), pp. 387-396
Published by: Wiley for the American Finance Association
Stable URL: http://www.jstor.org/stable/222474
Page Count: 10
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Contagious Speculation and a Cure for Cancer: A Nonevent That Made Stock Prices Soar
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Abstract

A Sunday New York Times article on a potential development of new cancer-curing drugs caused EntreMed's stock price to rise from 12.063 at the Friday close, to open at 85 and close near 52 on Monday. It closed above 30 in the three following weeks. The enthusiasm spilled over to other biotechnology stocks. The potential breakthrough in cancer research already had been reported, however, in the journal Nature, and in various popular newspapers (including the Times) more than five months earlier. Thus, enthusiastic public attention induced a permanent rise in share prices, even though no genuinely new information had been presented.

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