Journal article
Investors׳ reaction to the use of poison pills as a tax loss preservation tool
Journal of accounting & economics, Vol.57(2-3), pp.132-148
04/01/2014
DOI: 10.1016/j.jacceco.2014.02.002
Abstract
The recent economic downturn resulted in firms generating significant tax losses, which they risked losing if they experienced an ownership change. In response, a number of loss firms adopted poison pill plans. We document a significant negative market reaction to the announcement of 62 poison pill adoptions related to net operating losses (NOLs), suggesting that in general investors do not consider management׳s claim that the pills are adopted to preserve a valuable tax asset to be credible. However, we find cross-sectional variation consistent with investors considering whether a pill is legitimately adopted to preserve the NOL or to entrench management.
Details
- Title: Subtitle
- Investors׳ reaction to the use of poison pills as a tax loss preservation tool
- Creators
- Stephanie A. Sikes - University of PennsylvaniaXiaoli (Shaolee) Tian - The Ohio State UniversityRyan Wilson - University of Oregon
- Resource Type
- Journal article
- Publication Details
- Journal of accounting & economics, Vol.57(2-3), pp.132-148
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.jacceco.2014.02.002
- ISSN
- 0165-4101
- eISSN
- 1879-1980
- Language
- English
- Date published
- 04/01/2014
- Academic Unit
- Accounting
- Record Identifier
- 9984380396302771
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