Staggered Boards, Corporate Opacity and Firm Value

57 Pages Posted: 10 Aug 2013 Last revised: 20 Apr 2014

See all articles by Augustine Duru

Augustine Duru

American University - Kogod School of Business

Dechun Wang

Texas A&M University

Yijiang Zhao

American University - Kogod School of Business

Date Written: August 20, 2012

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.

Keywords: Staggered boards, Antitakeover provisions, Corporate opacity, Performance

JEL Classification: G3, K2

Suggested Citation

Duru, Augustine and Wang, Dechun and Zhao, Yijiang, Staggered Boards, Corporate Opacity and Firm Value (August 20, 2012). Journal of Banking and Finance, Vol. 37, No. 2, 2013. Available at SSRN: https://ssrn.com/abstract=2307728

Augustine Duru

American University - Kogod School of Business ( email )

4400 Massachusetts Avenue NW
Washington, DC 20816-8044
United States
202-885-1937 (Phone)
202-885-1992 (Fax)

Dechun Wang

Texas A&M University ( email )

430 Wehner
College Station, TX 77843-4353
United States

Yijiang Zhao (Contact Author)

American University - Kogod School of Business ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States
202-885-1941 (Phone)

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