How do staggered boards affect shareholder value? Evidence from a natural experiment

Alma Cohen and Charles C.Y. Wang

Journal of Financial Economics, 2013, vol. 110, issue 3, 627-641

Abstract: The well-established negative correlation between staggered boards (SBs) and firm value could be due to SBs leading to lower value or a reflection of low-value firms' greater propensity to maintain SBs. We analyze the causal question using a natural experiment involving two Delaware court rulings—separated by several weeks and going in opposite directions—that affected the antitakeover force of SBs. We contribute to the long-standing debate on staggered boards by presenting empirical evidence consistent with the market viewing SBs as leading to lower firm value for the affected firms.

Keywords: Corporate governance; Staggered board; Takeover defense; Antitakeover provision; Proxy fight; Tobin's; Firm value; Agency cost; Delaware; Chancery Court; Airgas (search for similar items in EconPapers)
JEL-codes: G14 G34 K22 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:110:y:2013:i:3:p:627-641

DOI: 10.1016/j.jfineco.2013.08.005

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