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  • December 2013
  • Article
  • Journal of Financial Economics

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

By: Alma Cohen and Charles C.Y. Wang
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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 documenting empirical evidence consistent with the market viewing SBs as leading to lower firm value for the affected firms.

Keywords

Staggered Board; Takeover Defense; Antitakeover Provision; Proxy Fight; Tobin's; Firm Value; Agency Cost; Delaware; Chancery Court; Airgas; Governing and Advisory Boards; Corporate Governance

Citation

Cohen, Alma, and Charles C.Y. Wang. "How Do Staggered Boards Affect Shareholder Value? Evidence from a Natural Experiment." Journal of Financial Economics 110, no. 3 (December 2013): 627–641.
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About The Author

Charles C.Y. Wang

Accounting and Management
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More from the Authors

    • August 10, 2022
    • Wall Street Journal

    The Virtues of Stock Buybacks

    By: Jesse M. Fried and Charles C.Y. Wang
    • Journal of Financial Economics

    How Much Should We Trust Staggered Difference-In-Differences Estimates?

    By: Andrew C. Baker, David F. Larcker and Charles C.Y. Wang
    • March 2022
    • Faculty Research

    Corporate Governance in Business Analysis and Valuation

    By: Charles C.Y. Wang
More from the Authors
  • The Virtues of Stock Buybacks By: Jesse M. Fried and Charles C.Y. Wang
  • How Much Should We Trust Staggered Difference-In-Differences Estimates? By: Andrew C. Baker, David F. Larcker and Charles C.Y. Wang
  • Corporate Governance in Business Analysis and Valuation By: Charles C.Y. Wang
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