This study examines the use of poison pill plans in the banking industry. This research demonstrates that the increasing number of banks adopting a poison pill plan is related to increasing market concentration. There are two hypotheses explaining the intent of these adoptions: (l) Managerial Entrenchment and (2) Shareholder Interest. This study specifically examined these hypotheses in the banking industry between 1986 and 2003. Results indicated that comparison banks not adopting a poison pill had a significant improvement in ROE the year after their peers adopted a poison pill. Additional results of this research contradict the popularly held belief that a poison pill plan provides a significant improvement in the probability of survival.
Business Administration, Management, and Operations
Hooper '07, Zachary, "An Empirical Investigation of Poison Pill Use in the Banking Industry" (2007). Honors Projects. 3.