Deck 5: Antitakeover Measures

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

D

Question 4

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

Question 5

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

Question 6

This person invented the poison pill:

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

Question 7

Which of the following are usually considered active antitakeover measures?

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

Question 8

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

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

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 11

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

Question 12

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 13

Wyeth, formerly known as American Home Products, paid the highest termination fees in history.

Question 14

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.

Question 15

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 16

Which of the following are usually considered preventative antitakeover measures?

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

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

Poison pill adoptions have:

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

Question 19

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 20

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