The adoption of poison pills and managerial entrenchment: Evidence from Japan

Yasuhiro Arikawa, Yosuke Mitsusada

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4 Citations (Scopus)


Using Japanese cases, this paper presents evidence that the adoption of poison pills reveals private information about preferences for managerial entrenchment to the stock market. We find that this private information revelation effect is the reason for the stock price decline with the announcement of poison pill defenses. The stock market considers the adoption of a poison pill to be a signal that the manager wishes to entrench him/herself. We also find that a CEO with longer tenure is more likely to adopt a poison pill when the performance of the firm is poor.

Original languageEnglish
Pages (from-to)63-77
Number of pages15
JournalJapan and the World Economy
Issue number1
Publication statusPublished - 2011 Jan



  • Poison pill
  • Takeover defense

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance
  • Political Science and International Relations

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