Abstract

http://ssrn.com/abstract=2364165
 
 

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Staggered Boards and Long-Term Firm Value, Revisited


Martijn Cremers


University of Notre Dame

Lubomir P. Litov


University of Oklahoma - Michael F. Price College of Business; University of Pennsylvania - Wharton Financial Institutions Center

Simone M. Sepe


University of Arizona - James E. Rogers College of Law; IAST - Fondation Jean-Jacques Laffont - TSE ; University of Toulouse 1 - Industrial Economic Institute (IDEI)

March 14, 2016


Abstract:     
This paper revisits the long-term association between firm value and staggered boards. We document that firms adopting a staggered board increase in value, while de-staggering is associated with a decrease in value. Our results are robust to several estimation models, including different matching procedures, dynamic GMM estimation and exploiting exogenous variation in Massachusetts’ corporate law. The positive association between firm value and staggered boards is driven by firms more engaged in research and where firm-specific stakeholder investments are more important, suggesting that staggered boards may promote long-term value creation by serving as a credible commitment device towards investments in long-term projects and stronger stakeholder relationships.

Number of Pages in PDF File: 76

Keywords: Staggered Boards, Classified Boards, Firm Value, Long-term Commitment, Entrenchment

JEL Classification: G34, K22


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Date posted: December 7, 2013 ; Last revised: May 22, 2016

Suggested Citation

Cremers, Martijn and Litov, Lubomir P. and Sepe, Simone M., Staggered Boards and Long-Term Firm Value, Revisited (March 14, 2016). Available at SSRN: http://ssrn.com/abstract=2364165 or http://dx.doi.org/10.2139/ssrn.2364165

Contact Information

K. J. Martijn Cremers (Contact Author)
University of Notre Dame ( email )
P.O. Box 399
Notre Dame, IN 46556-0399
United States
Lubomir P. Litov
University of Oklahoma - Michael F. Price College of Business ( email )
307 West Brooks
Norman, OK 73019-4004
United States
University of Pennsylvania - Wharton Financial Institutions Center
2306 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
United States

Simone M. Sepe
University of Arizona - James E. Rogers College of Law ( email )
P.O. Box 210176
Tucson, AZ 85721-0176
United States
IAST - Fondation Jean-Jacques Laffont - TSE ( email )
21 allée de Brienne
31015 Toulouse Cedex 6
Toulouse Cedex, F-31042
France
University of Toulouse 1 - Industrial Economic Institute (IDEI) ( email )
Manufacture des Tabacs
21 Allee de Brienne bat. F
Toulouse Cedex, F-31000
France
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