It’s a Trap: Emperor Palpatine’s Poison Pill

Does real-time reporting deter strategic disclosures by management?

Over the last decade, the SEC has taken a number of steps to move towards a realtime reporting regime in an effort to deter strategic accumulation of news disclosures by management. However, evidence from theoretical literature suggests managers are still able to engage in strategic bunching of within-firm disclosures under a real-time reporting regime if managers have control over the timing o...

On the Use of Poison Pills and Defensive Payouts by Takeover Targets*

On August 4, 1998, Allied Signal announced a $44.50 per share unsolicited takeover offer for AMP Incorporated. Upon the announcement, the stock price of AMP increased by 49%, from $28.625 to $42.5625. AMP’s management, armed with a poison pill plan and Pennsylvania antitakeover statutes, rejected the buyout offer. However, over the following few weeks, 72% of AMP’s shareholders chose to tender ...

Takeover defenses and wealth effects on securityholders: The case of poison pill adoptions

This is the first study to examine the valuation effects of any antitakeover amendment on both bondholders and stockholders. We present new evidence documenting that, on average, there is a significant wealth loss experienced by bondholders at poison pill adoption announcement, while stockholders are unaffected. Our finding of significant bondholder losses is consistent with the proposed negati...

Selectica Resets the Trigger on the Poison Pill: Where Should the Delaware Courts Go Next?

Auditing, Governance and Reporting: an Experimental Investigation

We use a controlled laboratory setting to experimentally examine the role of auditing and market-based-governance in restraining managerial expropriation and inaccurate financial reporting. Managerial expropriation is broadly defined as the enabling of all actions that opportunistically transfer wealth from investors to managers through understatement of realizable income. Similarly, auditing i...