The purpose of this paper is to examine the effect of poison pills on shareholder wealth using cases of Japanese firms that announced the adoption of poison pills between April 2005 and May 2006. We find that announcements of poison pill defenses reduce shareholder wealth by a significant...

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...