POISON OR PLACEBO - EVIDENCE ON THE DETERRENCE AND WEALTH EFFECTS OF MODERN ANTITAKEOVER MEASURES

This paper provides large-sample evidence that poison pill rights issu es, control share laws, and business combination laws have not systema tically deterred takeovers and are unlikely to have caused the demise of the 1980s market for corporate control, even though 87% of all exch ange-listed firms are now covered by one of these antitakeover measure s. We show that poison pills and control share laws are reliably assoc iated with higher takeover premiums for selling shareholders, both unc onditionally and conditional on a successful takeover, and we provide updated event study evidence for the three-quarters of all poison pill s not yet analyzed. Antitakeover measures increase the bargaining posi tion of target firms, but they do not prevent many transactions.