(2009) entrenchment index, which consists of the six most effective antitakeover measures
. Finally, we also include board size and the percentage of independents on the board.
William Schwert, Poison or Placebo?: Evidence on the Deterrence and Wealth Effects of Modern Antitakeover Measures
, 39 J.
(307) See Coates, supra note 6, at 291-97, 306-10, 328-36 (providing evidence that pill adoptions do not affect bids, that poison pills do not correlate with other firm traits, and that certain other antitakeover measures
have not been shown to affect bids).
Rights agreements are popular antitakeover measures
, but the price at which the shareholder may purchase additional shares in the case of a takeover is usually set below or close to the market price.
William Schwert, "Poison or Placebo Evidence on the Deterrence and Wealth Effects of Modern Antitakeover Measures
" (1995) 39 J.
to oppose its adoption of antitakeover measures
, reduced shares in five Japanese firms, while increasing equity in two firms.
Whether the topic is executive compensation, majority voting for directors, or antitakeover measures
, the influence of shareholders on corporate policymaking is definitely on the rise.
While the existing literature reports conflicting findings concerning the relationship between the inside/outside director dichotomy and the adoption of antitakeover measures
, consistent with agency theory we propose:
Evidence on the deterrence and wealth effects of modern antitakeover measures
. Journal of Financial Economics, 39: 3-43.
Both LBOs and LRs are antitakeover measures
in that they can be motivated by the threat of a takeover by outsiders.
Alternatively, Comment and Schwert (1995) state that antitakeover measures
are unlikely to alter a firm's probability of being acquired and are not a significant tool for management to entrench and protect themselves.
Current management issues the board may wish to reexamine may include the company's strategic and operating plans, conflict of interest situations, pending acquisitions or takeover bids, pending proxy contests, antitakeover measures
under consideration, and specific human resources and regulatory compliance issues.