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Staggered boards, corporate opacity and firm value

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  • Duru, Augustine
  • Wang, Dechun
  • Zhao, Yijiang

Abstract

We explore the effect of corporate opacity on the relation between staggered boards and firm value. We find that through mitigating takeover pressure, staggered boards become increasingly beneficial to firm value as opacity increases. In addition, we document that staggered boards reduce value only in transparent firms. Additional tests indicate that, as opacity increases, staggered boards bear an increasingly positive relation to research and development and CEO pay-performance sensitivity. Taken together, these results suggest that corporate opacity affects the value impact of takeover protection.

Suggested Citation

  • Duru, Augustine & Wang, Dechun & Zhao, Yijiang, 2013. "Staggered boards, corporate opacity and firm value," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 341-360.
    • Handle: RePEc:eee:jbfina:v:37:y:2013:i:2:p:341-360
    DOI: 10.1016/j.jbankfin.2012.09.002
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    Cited by:

    1. Kai Wang & Kun-Kun Xue & Jin-Hua Xu & Chien-Chi Chu & Sang-Bing Tsai & He-Jun Fan & Zhen-Yu Wang & Jiangtao Wang, 2018. "How Does a Staggered Board Provision Affect Corporate Strategic Change?—Evidence from China’s Listed Companies," Sustainability, MDPI, vol. 10(5), pages 1-13, May.
    2. Hongchao Zeng, 2014. "Financial Constraints, Antitakeover Protection, and Corporate Innovation: An Empirical Analysis using Antitakeover Legislation," Review of Economics & Finance, Better Advances Press, Canada, vol. 4, pages 1-15, August.
    3. Cremers, K.J. Martijn & Litov, Lubomir P. & Sepe, Simone M., 2017. "Staggered boards and long-term firm value, revisited," Journal of Financial Economics, Elsevier, vol. 126(2), pages 422-444.
    4. Cornaggia, Jess & Li, Jay Yin, 2019. "The value of access to finance: Evidence from M&As," Journal of Financial Economics, Elsevier, vol. 131(1), pages 232-250.
    5. Anne Anderson & Jill Brown & Parveen P. Gupta, 2017. "Jurisdictional competition for corporate charters and firm value: a reexamination of the Delaware effect," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 14(4), pages 341-356, November.
    6. Omer Unsal & Blake Rayfield, 2020. "Correction to: Corporate governance and employee treatment: Evidence from takeover defenses," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 44(2), pages 392-416, April.
    7. Liu, Chengcheng & Li, Qing & Lin, Yu-En, 2023. "Corporate transparency and firm value: Does market competition play an external governance role?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(1).
    8. Field, Laura Casares & Lowry, Michelle, 2022. "Bucking the trend: Why do IPOs choose controversial governance structures and why do investors let them?," Journal of Financial Economics, Elsevier, vol. 146(1), pages 27-54.
    9. You, Linqing & Chen, Zhuoqiong, 2022. "A theory of firm opacity and corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 145(C).

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    More about this item

    Keywords

    Staggered boards; Antitakeover provisions; Corporate opacity; Performance;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • K2 - Law and Economics - - Regulation and Business Law

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