Abstract

http://ssrn.com/abstract=1136784
 


 



Is There Power Behind the Dead Hand? An Empirical Investigation of Dead Hand Poison Pills


Katherine Gleason


University of New Orleans - College of Business Administration - Department of Economics and Finance

Mark Klock


Penn State Law

May 23, 2008

Penn State Legal Studies Research Paper No. 02-2008
Corporate Ownership & Control, Vol. 6, Fall 2008

Abstract:     
Dead hand poison pills prevent potential hostile acquirers from circumventing a poison pill with a proxy contest whereby newly elected directors could redeem the pill. Dead hand provisions only permit continuing directors to redeem. Shareholder rights advocates and legal scholars have criticized dead hand poison pills as an assault on shareholder governance, but economic theory suggests potential shareholder benefits. We provide the first empirical study of dead hand poison pills. We find that adoption of dead hand poison pills leads to gains for shareholders and losses for bondholders. This supports Schwert's (2000) conjecture that poison pills provide shareholders with better premiums rather than entrench ineffective managers.

Number of Pages in PDF File: 27

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Date posted: May 23, 2008  

Suggested Citation

Gleason, Katherine and Klock, Mark, Is There Power Behind the Dead Hand? An Empirical Investigation of Dead Hand Poison Pills (May 23, 2008). Penn State Legal Studies Research Paper No. 02-2008; Corporate Ownership & Control, Vol. 6, Fall 2008. Available at SSRN: http://ssrn.com/abstract=1136784

Contact Information

Katherine Gleason
University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )
2000 Lakeshore Drive
New Orleans, LA 70148
United States
Mark S. Klock (Contact Author)
Penn State Law ( email )
150 South College Street
Carlisle, PA 17013
United States
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