Poison or Placebo? Evidence on the Deterrent and Wealth Effects of Modern Antitakeover Measures

Posted: 4 May 2000

See all articles by Robert Comment

Robert Comment

Independent

G. William Schwert

University of Rochester - Simon Business School; National Bureau of Economic Research (NBER)

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Abstract

This paper provides large sample evidence that poison pill rights issues, control share laws, and business combination laws have not been used systematically to deter takeovers and are unlikely to have caused the demise of the 1980s market for corporate control, even though 87% of all exchange-listed firms are now covered by one of these antitakeover measures. We show that poison pills and control share laws are reliably associated with higher takeover premiums for selling shareholders, both unconditionally and conditional on a successful takeover, and we provide updated event study evidence for the three- quarters of all poison pills not yet analyzed. Antitakeover measures increase the bargaining position of target firms, but they do not prevent many transactions.

JEL Classification: G34, G38

Suggested Citation

Comment, Robert and Schwert, G. William, Poison or Placebo? Evidence on the Deterrent and Wealth Effects of Modern Antitakeover Measures. JOURNAL OF FINANCIAL ECONOMICS, 1995. Available at SSRN: https://ssrn.com/abstract=5781

Robert Comment

Independent ( email )

No Address Available

G. William Schwert (Contact Author)

University of Rochester - Simon Business School ( email )

Carol Simon Hall 3-110L
Rochester, NY 14627
United States
585-275-2470 (Phone)
585-461-5475 (Fax)

HOME PAGE: http://schwert.ssb.rochester.edu

National Bureau of Economic Research (NBER)

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