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

This paper provides large-sample evidence that poison pill rights issues, control share statutes, and business combination statutes do not 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 or another of these antitakeover measures. We show that poison pills and control share statutes 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.

The Effects Of Firm-specific Human Capital On Management Equity Investment And Turnover (corporate Control).

This dissertation has two parts. The first part investigates differences in the level of investment by top managers in their employers' common stock. Large sample cross-sectional evidence is presented which indicates a strong positive relation between managers' fractional ownership of their employers' common stock and their years of experience with that employer. In addition, the magnitude of this positive relation is found to be decreasing in the size of the employer's internal managerial labor market. Years of firm-specific experience is used as a proxy for the magnitude of managerial quasi-rents associated with firm-specific human capital. These results support the contention that managerial equity investment supplements labor market competition for purposes of controlling managerial incentives and behavior when managerial labor markets are not populated by perfect substitutes. The second part investigates differences in the rate of turnover among top managers, for evidence of whether or not management entrenchment serves motivation for corporate takeover attempts. Data are provided that are inconsistent with this hypothesis. Management turnover is not abnormally low prior to corporate control contests. However, top-management turnover is found to be substantially above normal subsequent to takeover attempts.Ph.D.FinanceSocial SciencesUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/127797/2/8600425.pd