Manuscript Title:

POISON AS PROTECTION: ESG PERFORMANCE OF POISON PILL STRATEGIES IN HOSTILE M&A

Author:

ZHANG BO, TAJUL ARIFFIN BIN MASRON

DOI Number:

DOI:10.5281/zenodo.17053368

Published : 2025-08-23

About the author(s)

1. ZHANG BO - School of Management, Universiti Sains Malaysia (USM), 11800, Penang, Malaysia.
2. TAJUL ARIFFIN BIN MASRON - School of Management, Universiti Sains Malaysia (USM), 11800, Penang, Malaysia.

Full Text : PDF

Abstract

Poison pill strategies are not only designed to defend against hostile M&As, but may also serve as instruments to safeguard long-term ESG commitments. This scenario reflects the role of sufficiently strong poison pill mechanisms that can preserve governance autonomy and enhancing corporate sustainability performance. Poison pills thus offer a potential win-win solution by protecting firms from short-term control pressures while promoting long-term ESG resilience. Therefore, the objective of this paper is to investigate the effect of hostile M&A activity on ESG performance, conditional on the strength of poison pill defenses, using a panel of listed firms from 2006 to 2023. The results of dynamic panel system GMM estimation reveal that the interaction term between hostile M&As and poison pill strength has a positive and significant effect on ESG outcomes. This implies that while hostile acquisitions may initially jeopardize sustainability practices, firms equipped with robust poison pill strategies can transform this challenge into an opportunity to reinforce their ESG priorities. Accordingly, the strategic deployment of poison pills may contribute to the dual goal of deterring takeover threats and sustaining long-term corporate responsibility.


Keywords

Hostile M&A, Poison Pill Strategies, ESG, GMM.