Are Poison Pills Poison for Shareholders? Evidence from Japan

Abstract:     
It remains debatable whether poison pills create or dilute shareholder wealth. The present study examines the Japanese market, where the adoption of poison pills accelerated during 2006 and 2007. Companies with lower ownership by keiretsu affiliates, employees and management are more likely to adopt poison pills. The adoption of a poison pill is associated with lower post-adoption excess returns, relative to firms that do not employ the defense. However, this is mitigated where there is a positive perception of incumbent management.

Keywords: Japan, keiretsu, takeover defense, poison pill, ownership structure

JEL Classifications: G34

Working Paper Series