The effect of poison pill adoptions and court rulings on firm entrenchment

Randall A. Heron and Erik Lie

Journal of Corporate Finance, 2015, vol. 35, issue C, 286-296

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.

Keywords: Poison Pill; Entrenchment; Takeover Defenses; Delaware (search for similar items in EconPapers)
JEL-codes: G30 G34 G38 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:35:y:2015:i:c:p:286-296

DOI: 10.1016/j.jcorpfin.2015.09.008

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