Outside directors and the adoption of poison pills

James A. Brickley; Jeffrey L. Coles; Rory L. Terry

doi:10.1016/0304-405x(94)90038-8

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Journal of Financial Economics Vol. 35 No. 3 1994

Outside directors and the adoption of poison pills

James A. Brickley¹; Jeffrey L. Coles^2,3; Rory L. Terry⁴

¹ University of Rochester · ² University of Utah · ³ Arizona State University · ⁴ Oklahoma State University

Abstract

We find that the average stock-market reaction to announcements of poison pills is positive when the board has a majority of outside directors and negative when it does not. The probability that a subsequent control contest is associated with an auction is also positively related to the fraction of outsiders on the board. These results are largely driven by directors who are retired executives from other companies. The evidence suggests that outside directors serve the interests of shareholders.

DOI: 10.1016/0304-405x(94)90038-8
Volume: 35
Issue: 3
Pages: 371-390
Language: en
Sources: bibtex:phds-export.bib openalex crossref

Outside directors and the adoption of poison pills

Abstract

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