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

* This paper has been replicated

Author

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  • Cohen, Alma
  • Wang, Charles C.Y.

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.

Suggested Citation

  • Cohen, Alma & Wang, Charles C.Y., 2013. "How do staggered boards affect shareholder value? Evidence from a natural experiment," Journal of Financial Economics, Elsevier, vol. 110(3), pages 627-641.
    • Handle: RePEc:eee:jfinec:v:110:y:2013:i:3:p:627-641
    DOI: 10.1016/j.jfineco.2013.08.005
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    References listed on IDEAS

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    Replication

    This item has been replicated by:
  • Amihud, Yakov & Stoyanov, Stoyan, 2017. "Do staggered boards harm shareholders?," Journal of Financial Economics, Elsevier, vol. 123(2), pages 432-439.

    • More about this item

    Keywords

    Corporate governance; Staggered board; Takeover defense; Antitakeover provision; Proxy fight; Tobin's; Firm value; Agency cost; Delaware; Chancery Court; Airgas;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. How do staggered boards affect shareholder value? Evidence from a natural experiment (JFE 2013) in ReplicationWiki

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