The Rise of Anti-Activist Poison Pills

We study contractual innovations in poison pills, focusing on low ownership thresholds and acting-in-concert provisions as defensive tactics against shareholder activism. Using unique data on hedge fund access to SEC filings to proxy for intervention threats, we find that firms facing such threats are more likely to adopt poison pills. Compared to other firms under activists’ scrutiny, those adopting pills experience fewer 13D filings, lower CEO turnover, and are less likely to implement corporate policies commonly targeted by activists, such as reducing investment and increasing share buybacks. Our findings inform policies regulating defensive measures against activists’ interventions.