Staggered Boards and Long-Term Firm Value, Revisited
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
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
Date posted: December 7, 2013 ; Last revised: May 22, 2016
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