Abstract
We examine the effect of stock price crash risk on the adoption of poison pills by Brazilian public firms. By using firm-level data of 191 Brazilian firms from 2010-2018, we find that stock price crash risk is not a driver that lead the adoption of poison pills. However, further results show that managers are not drawing on stock price crash risk as a pretext to entrench themselves, considering that more crash-prone companies do not face a higher likelihood of adopting a particular Brazilian type of poison pills that signals aggressive managerial entrenchment intentions, namely eternity poison pills.
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