On the Use of Poison Pills and Defensive Payouts by Takeover Targets

Randall A. Heron and Erik Lie
Additional contact information
Randall A. Heron: Indiana University
Erik Lie: University of Iowa

The Journal of Business, 2006, vol. 79, issue 4, 1783-1808

Abstract: Using a large sample of unsolicited takeover attempts, we examine the determinants and effects of targets' choice to adopt poison pills either before or after unsolicited offers and to initiate defensive payouts. The probability of poison pill adoptions decreases with insider ownership, whereas the probability of defensive repurchases increases at a decreasing rate with insider ownership. Poison pills contribute to bid increases and higher bids, yet do not alter the likelihood of takeover. Defensive share repurchases slightly reduce the takeover likelihood but do not appear to harm shareholders, perhaps because they tend to fend off lowball bids or increase the firm's leverage.

Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://dx.doi.org/10.1086/503648 main text (application/pdf)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jnlbus:v:79:y:2006:i:4:p:1783-1808

Access Statistics for this article

More articles in The Journal of Business from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().