| Abstract: | Previous studies of shareholder rights plans (poison pills) have emphasized short-term valuation effects in the context of specific takeover attempts. This paper analyzes rights largely adopted in ‘neutral’ environments. Using a paired-case control approach, differences between rights and non-rights firms are examined. Positive long-term valuation effects are associated with restructurings, while negative performance is associated with ownership/control influences. The evidence supports a multiple signalling model in which investors use subsequent information to revise probabilities concerning control preferences of management and directors. |
