Abstract
Poison pill adoptions may have varying effects on firm value. Shareholder-friendly pills have been adopted by firms in recent years, but have not been thoroughly examined in the financial literature. We find that the adoption of shareholder-friendly pills results in favourable valuation effects. The adoption of poison pills classified as unfriendly does not elicit a significant market response. Valuation effects are conditioned on the type of pills within the friendly or unfriendly category. Sunset and TIDE provisions elicit more favourable market responses than other friendly pills, while dead hand provisions elicit a less favourable market response than other unfriendly pills.
Published Version
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