Estimating the effect of entrenched boards on firm value using geographic identification

Pandej Chintrakarn, Pornsit Jiraporn, Shenghui Tong and Pattanaporn Chatjuthamard

Finance Research Letters, 2015, vol. 12, issue C, 109-116

Abstract: We show that firms located geographically close to one another share a similar probability of having staggered boards (or classified boards), an effect probably due to investor clientele, local competition, and social interactions. We then exploit the variation across the zip codes in the incidence of staggered boards and estimate the effect of staggered boards on firm value (measured by Tobin’s Q). We use as our instrumental variable the proportion of firms located in the same zip code that have staggered boards, excluding firm i. The evidence shows that staggered boards reduce firm value significantly.

Keywords: Staggered boards; Classified boards; Entrenched boards; Firm value; Geography (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612314000622
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:12:y:2015:i:c:p:109-116

DOI: 10.1016/j.frl.2014.11.002

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().