References (54)


Citations (4)



Classified Boards, the Cost of Debt, and Firm Performance

Dong Chen

University of Baltimore

August 10, 2014

Journal of Banking and Finance, 2012, vol. 36, issue 12, p3346-3365

This paper documents that classified boards substantially reduce the cost of debt. The evidence is not consistent with the argument that bondholders benefit from board classification because they are concerned about hostile takeovers. Instead, the results suggest that the lessened concern for takeovers associated with a classified board structure reduces managerial risk-taking, and increases managerial incentive for financial disclosure, with both effects inuring to bondholders’ benefit. Consistent with prior literature, classified boards on average are associated with a lower firm performance. However, under the circumstances that the agency conflict between shareholders and bondholders is severe, the performance effect of classified boards appears benign.

Number of Pages in PDF File: 61

Keywords: classified board, staggered boards, corporate governance, agency cost of debt, firm performance, antitakeover, risk-taking, disclosure, transparency

JEL Classification: G30, G34

Open PDF in Browser Download This Paper

Date posted: December 23, 2010 ; Last revised: August 11, 2014

Suggested Citation

Chen, Dong, Classified Boards, the Cost of Debt, and Firm Performance (August 10, 2014). Journal of Banking and Finance, 2012, vol. 36, issue 12, p3346-3365. Available at SSRN: http://ssrn.com/abstract=1729472 or http://dx.doi.org/10.2139/ssrn.1729472

Contact Information

Dong Chen (Contact Author)
University of Baltimore ( email )
1420 N. Charles Street
Baltimore, MD 21201
United States
Feedback to SSRN

Paper statistics
Abstract Views: 1,444
Downloads: 274
Download Rank: 82,562
References:  54
Citations:  4

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.250 seconds