The adoption of poison pills and managerial entrenchment: Evidence from Japan

Yasuhiro Arikawa and Yosuke Mitsusada

Japan and the World Economy, 2011, vol. 23, issue 1, 63-77

Abstract: Abstract Using Japanese cases, this paper presents evidence that the adoption of poison pills reveals private information about preferences for managerial entrenchment to the stock market. We find that this private information revelation effect is the reason for the stock price decline with the announcement of poison pill defenses. The stock market considers the adoption of a poison pill to be a signal that the manager wishes to entrench him/herself. We also find that a CEO with longer tenure is more likely to adopt a poison pill when the performance of the firm is poor.

Keywords: Poison; pill; Takeover; defense (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:23:y:2011:i:1:p:63-77

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