Shareholder Wealth Effects Of Poison Pills In The Presence Of Anti-Takeover Amendments

Abstract

In the 1980s managers were innovating in implementing arsenals of devices to prevent possible takeovers of their firms. These anti-takeover devices were usually amendments to the corporate charter or poison pills. Prior studies have examined market reactions to either amendment devices or poison pills. This study provides an extension to those studies by examining marketing reactions to poison pills as the first anti-takeover devices compared with pill adoptions as an addition to an already existing arsenal of charger amendment devices. Results indicate that market reactions differ between these two types of events. Stockholder wealth effects differ also according to the type of charter amendment in place at the time of pill adoption.