Staggered Boards and Long-Term Firm Value, Revisited
56 Pages Posted: 7 Dec 2013 Last revised: 25 Jul 2017
Date Written: July 25, 2017
This paper revisits the staggered board debate focusing on the long-term association of firm value with changes in board structure. We find no evidence that staggered board changes are negatively related to firm value. However, we find a positive relation for firms engaged in innovation and where stakeholder relationships matter more. This suggests that staggered boards promote value creation for some firms by committing the firm to undertaking long-term projects and bonding it to the relationship-specific investments of its stakeholders. Our results are robust to matching procedures and an exogenous change in Massachusetts corporate law that mandated staggered boards.
Keywords: Staggered Boards, Classified Boards, Firm Value, Long-term Commitment, Entrenchment
JEL Classification: G34, K22
Suggested Citation: Suggested Citation