How Do Staggered Boards Affect Shareholder Value? Evidence from a Natural Experiment

By Alma Cohen, C. Wang. 2013

131 citations recorded by the source corpus.

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.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/99a51b274c6114025c74b3f831378cee68225eaf

Citations in the corpus

• CEO Duality, Agency Costs, and Internal Capital Allocation Efficiency (2019, unknown): “A staggered board may exacerbate agency problems and lead to CEO entrenchment, as it potentially insulates the firm from the pressure of the market for corporate control (Bebchuk et al. , 2002; Cohen and Wang, 2013; Amihud and Stoyanov, 2017).”
• Staggered Boards and Firm Value, Revisited (2013, unknown): “Prior studies find that, in the cross-section, having a staggered board is associated to a reduction in firm value (Bebchuk, Coates, and Subramanian, 2002; Bebchuk and Cohen, 2005; Faleye, 2007; Masulis, Wang, and Xie, 2007; Cohen and Wang, 2013).”