Contagious Speculation and a Cure for Cancer: A Non-Event that Made Stock Prices Soar
Coauthor(s): Tomer Regev.
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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.
Source: Journal of Finance
Huberman, Gur, and Tomer Regev. "Contagious Speculation and a Cure for Cancer: A Non-Event that Made Stock Prices Soar." Journal of Finance 56, no. 1 (February 2001): 387-96.