Deck 5: Antitakeover Measures

Question 1

Poison pill adoptions have:

A) Increased in recent years
B) Deceased in recent years
C) Been stable
D) Have slowly and steadily increased

Answer 1

B

Question 2

The research of Bebchuk and Cohen found a negative relationship between firm value, as measured by Tobin's q, and the implementation of a staggered board.

Answer 2

True

Question 3

Jarrell found that litigation can increase shareholder value through facilitating auctions.

Answer 3

True

Question 4

This person invented the poison pill:

A) Sir James Goldsmith
B) Joe Flom
C) Martin Lipton
D) Carl Icahn

Question 5

Which of the following are usually considered active antitakeover measures?

A) Greenmail
B) Poison pills
C) Corporate charter amendments
D) All the above

Question 6

Morck, Shleifer, and Vishny found that with higher share ownership by management there tends to be:

A) More antitakeover defense
B) Higher Tobin q's
C) Lower shareholder values
D) None of the above

Question 7

The use of greenmail has:

A) Gone up in the 2000s
B) Has steadily declined and is not common today
C) Is used mainly when the raider is a hedge fund
D) Is used mainly when the raider is a private equity fund

Question 8

Which of the following are usually considered preventative antitakeover measures?

A) Greenmail
B) Poison pills
C) Tender offers
D) All the above

Question 9

Flip-in provisions allow holders of rights to acquire stock in the target, as opposed to flip-over rights, which allow holders to acquire stock in the acquirer.

Question 10

The Pac-Man defense:

A) Has found a new resurgence
B) Was done in the Bendix-Martin Marietta battle
C) Is not common today
D) Both a and b
E) Both b and c True or False Questions

Question 11

Answer: Research has shown that shareholders in companies that become white knights experience increased shareholder wealth.

Question 12

The Georgeson studies showed that pill-protected companies had reduced shareholder values.

Question 13

Answer: Research shows that changing the state of incorporation:

A) Had no significant shareholder wealth effects
B) Resulted in increased shareholder wealth effects
C) Resulted in decreased shareholder wealth effects
D) None of the above

Question 14

Malatesta and Walking found that, on average, the managerial ownership percentage was significantly less for firms that adopted poison pills compared with industry averages.

Question 15

Masulis, Wang, and Xie found that the greater the divergence between insider voting rights and cash flow rights, the more likely shareholder wealth will increase.

Question 16

The case involving this company established the legality of poison pills in the United States:

A) Crown-Zellerbach
B) Kraft Foods
C) Universal Foods
D) Household International

Question 17

Goldsmith was able to circumvent this particular Crown-Zellerbach defense by:

A) Poison pill
B) Greenmail
C) Corporate charter amendment
D) None of the above

Question 18

Back-end plans are also referred to as note purchase rights plans.

Question 19

There has been a marked trend in the United States toward declassifying boards.

Question 20

Poison pills can increase shareholder values through facilitating an auction process.