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

Alma Cohen, Charles C.Y. Wang

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish
Pages (from-to)627-641
Number of pages15
JournalJournal of Financial Economics
Volume110
Issue number3
DOIs
StatePublished - Dec 2013

Keywords

  • Agency cost
  • Airgas
  • Antitakeover provision
  • Chancery Court
  • Corporate governance
  • Delaware
  • Firm value
  • Proxy fight
  • Staggered board
  • Takeover defense
  • Tobin's

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