Journal article
The effect of poison pill adoptions and court rulings on firm entrenchment
Journal of corporate finance (Amsterdam, Netherlands), Vol.35, pp.286-296
12/01/2015
DOI: 10.1016/j.jcorpfin.2015.09.008
Abstract
We challenge a common presumption that poison pills and two Delaware case rulings in 1995 validating such pills materially entrench firms. Based on unsolicited takeover attempts from 1985 to 2009, we find that poison pills enhance takeover premiums, but do not reduce completion rates. Furthermore, the 1995 Delaware rulings affected neither the use of poison pills among the targets, the effectiveness of the pills that were used, the completion rate of the takeover attempts, nor the takeover premiums.
•We examine the outcomes of a large sample of unsolicited takeover attempts from 1985 through 2009.•The evidence shows that poison pills lead to increased premiums for shareholders.•There is no evidence that poison pills have lowered takeover completion rates.•Court rulings in 1995 on poison pills of Delaware incorporated firms did not entrench management.
Details
- Title: Subtitle
- The effect of poison pill adoptions and court rulings on firm entrenchment
- Creators
- Randall A. Heron - Indiana University – Purdue University IndianapolisErik Lie - University of Iowa
- Resource Type
- Journal article
- Publication Details
- Journal of corporate finance (Amsterdam, Netherlands), Vol.35, pp.286-296
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.jcorpfin.2015.09.008
- ISSN
- 0929-1199
- eISSN
- 1872-6313
- Language
- English
- Date published
- 12/01/2015
- Academic Unit
- Finance
- Record Identifier
- 9984380484202771
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