Contrary to arguments that poison pills degrade firm performance, we find that operating performance modestly improves during the 5-year period after pill adoption. Performance improvements are present in a wide range of firms, and are independent of adoption year and whether the firm is R&D intensive. Although recent arguments suggest that the protection offered by pills is strongest when combined with a staggered board, the performance changes also are unrelated to board structure. This evidence undermines the widely held view that poison pills have systematically negative effects on firm performance.

We document a large and broad-based increase in the use of corporate governance provisions in the late 1980s. As a result, most large publicly traded firms have complex governance structures. This violates an assumption implicit in many empirical studies that provision use is mutually independent. While overall provision use is not systematically related to industry grouping, the uses of some types of provisions are correlated. Most notably, supermajority vote requirements, classified boards, and shareholder meeting requirements tend to be used in concert. Firms reincorporating to Delaware tend to eliminate cumulative voting, and coverages by certain types of state antitakeover laws are correlated. We also find that firms with poison pills tend to have relatively high institutional ownership, low managerial ownership, and a high proportion of independent directors.