Investors' reaction to the use of poison pills as a tax loss preservation tool

• 成果类型: Article
• 署名作者: Sikes, Stephanie A.; Tian, Xiaoli (Shaolee); Wilson, Ryan
• 署名单位: University of Pennsylvania; University System of Ohio; Ohio State University; University of Oregon
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2014.02.002
• 发表日期: 2014
• 关键词: securities; WEALTH

摘要

The recent economic downturn resulted in firms generating significant tax losses, which they risked losing if they experienced an ownership change. In response, a number of loss firms adopted poison pill plans. We document a significant negative market reaction to the announcement of 62 poison pill adoptions related to net operating losses (NOLs), suggesting that in general investors do not consider management's claim that the pills are adopted to preserve a valuable tax asset to be credible. However, we find cross-sectional variation consistent with investors considering whether a pill is legitimately adopted to preserve the NOL or to entrench management. (C) 2014 Elsevier B.V. All rights reserved.