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

Citation:

Cohen, Alma, and Charles CY Wang. “How Do Staggered Boards Affect Shareholder Value? Evidence from a Natural Experiment.” Journal of Financial Economics 110, no. 3 (2013): 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.

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Last updated on 06/06/2014