ANCIENT REDWOODS AND THE POLITICS OF FINANCE - THE HOSTILE TAKEOVER OF THE PACIFIC-LUMBER-COMPANY

Pacific Lumber was acquired in 1986 by MAXXAM, whose decision to doubl e PL's harvest of old-growth redwoods precipitated 11 years of environ mental protests. Intense media coverage blames the Drexel-financed tak eover for threatening Headwaters Forest, the largest privately owned a ncient redwood forest. This 'Wall Street greed' portrayal aroused such public outrage that the Clinton administration agreed to pay $380 mil lion for Headwaters weeks before the 1996 election. We establish that the threat to Headwaters is not attributable to MAXXAM's junk bond-fin anced takeover. Government's response to dramatic crises encourages in terest groups to use emotional appeals to influence resource allocatio n. (C) 1998 Published by Elsevier Science S.A. All rights reserved.