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

Yasuhiro Arikawa; Yosuke Mitsusada

doi:10.1016/j.japwor.2010.11.003

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

Yasuhiro Arikawa^*, Yosuke Mitsusada

^*Corresponding author for this work

Graduate School of Business and Finance

Research output: Contribution to journal › Article › peer-review

6 Citations (Scopus)

Abstract

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 language	English
Pages (from-to)	63-77
Number of pages	15
Journal	Japan and The World Economy
Volume	23
Issue number	1
DOIs	https://doi.org/10.1016/j.japwor.2010.11.003
Publication status	Published - 2011 Jan

Keywords

Poison pill
Takeover defense

ASJC Scopus subject areas

Finance
Economics and Econometrics
Political Science and International Relations

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10.1016/j.japwor.2010.11.003

Cite this

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AB - 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.

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

Abstract

Keywords

ASJC Scopus subject areas

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