The return of poison pills : a first look at "crisis pills"

We show that a large number of firms adopt poison pills during periods of market turmoil. In particular, during the coronavirus (COVID-19) pandemic, many firms adopted poison pills in response to declines in valuations, and stock prices increased upon their announcements. This increase is driven by (1) firms in which activist shareholders acquire ownership stakes, (2) firms in industries that had high exposure to the crisis. Likewise, we find a positive reaction to pills with characteristics that target activist investors. Our results suggest that crisis pills that target potentially disruptive ownership changes may benefit current shareholders