VGSF - WU Vienna - LC

William C. Johnson, Suffolk University/WU Wien

Campus WU D4.4.008 12:00 - 13:00

Organizer WU Vienna

The Fin­ance Brown Bag Sem­inar is held by the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance (WU Vi­enna) and the Vi­enna Gradu­ate School of Fin­ance (VGSF). It serves as a present­a­tion plat­form for PhD stu­dents, fac­ulty mem­bers, and vis­it­ors. An over­view of BBS on the web­site of the In­sti­tute for Fin­ance, Bank­ing and In­sur­ance.

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March 3rd, 2020, 12:00-13:00, D4.4.008

Wil­liam C. John­son, Suf­folk Uni­versity/WU Wien

Title: "The con­sequences to dir­ect­ors of de­ploy­ing poison pills"

Ab­stract

We ex­am­ine the labor mar­ket con­sequences for dir­ect­ors who ad­opt poison pills. Dir­ect­ors who be­come as­so­ci­ated with pill ad­op­tion ex­per­i­ence sig­ni­fic­ant de­creases in vote mar­gins and in­creases in ter­min­a­tion rates across all their dir­ect­or­ships. They also ex­per­i­ence a de­crease in the like­li­hood of new board ap­point­ments. Firms have pos­it­ive ab­nor­mal stock price re­ac­tions when pill-as­so­ci­ated dir­ect­ors die or de­part their boards, com­pared to zero ab­nor­mal re­turns for other dir­ect­ors. Fur­ther tests in­dic­ate that these ad­verse con­sequences ac­crue primar­ily to dir­ect­ors in­volved in the ad­op­tion of pills at seasoned firms and not at young firms. We con­clude that dir­ect­ors who be­come as­so­ci­ated with poison pill ad­op­tion suf­fer a de­crease in the value of their ser­vices, and that the dir­ector labor mar­ket thus plays an im­port­ant role in firms’ gov­ernance.



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