Open AccessFinancial Characteristics Of Firms Adopting Poison Pill Plans
Author(s) -
Nancy Mohan,
M. Fall Ainina,
Daniel J. Kaufman
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v4i2.6434
Subject(s) - pill , cash flow , business , finance , free cash flow , sample (material) , cash , value (mathematics) , monetary economics , economics , medicine , chemistry , chromatography , pharmacology , machine learning , computer science
This study investigates whether firms adopting poison pill plans possess financial characteristics indicative of their having free cash flow. The analysis uses six financial ratios selected to provide evidence of whether a firm has cash flows in excess of those needed to fund value-enhancing investments. A sample of 184 firms that have adopted poison pill plans were matched with firms from their industries. The results provide little evidence supporting the implications of the free cash flow theory.