Staggered Boards and Shareholder Value: A Reply to Amihud and Stoyanov

Forthcoming, Journal of Financial Economics

19 Pages Posted: 5 Dec 2015 Last revised: 20 Apr 2017

See all articles by Alma Cohen

Alma Cohen

Harvard Law School; Tel Aviv University - Eitan Berglas School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

Charles C. Y. Wang

Harvard Business School (HBS)

Date Written: December 1, 2015

Abstract

In a paper published in the JFE in 2013, we provided evidence that market participants perceive staggered boards to be on average value-reducing. In a recent response paper, Amihud and Stoyanov (2015) “contest” our results. They advocate using alternative methods for estimating risk-adjusted returns and excluding some observations from our sample. Amihud and Stoyanov claim that making such changes renders our results not significant (though retaining their direction) and conclude that staggered boards have no significant effect on firm value. This paper examines and replies to the Amihud-Stoyanov challenge. We question their methodological claims, study the consequences of following their suggestions, and conduct additional robustness tests. Our analysis shows that the evidence is overall consistent with the results and conclusions of our JFE paper.

Keywords: Corporate governance, Staggered boards, Takeover defense, Antitakeover provision, Firm value, Agency costs, Delaware, Chancery court, Airgas

JEL Classification: G30, G34, K22

Suggested Citation

Cohen, Alma and Wang, Charles C. Y., Staggered Boards and Shareholder Value: A Reply to Amihud and Stoyanov (December 1, 2015). Forthcoming, Journal of Financial Economics , Available at SSRN: https://ssrn.com/abstract=2697352 or http://dx.doi.org/10.2139/ssrn.2697352

Alma Cohen

Harvard Law School ( email )

Cambridge, MA 02138
United States
(617) 496-4099 (Phone)
(617) 812-0554 (Fax)

Tel Aviv University - Eitan Berglas School of Economics ( email )

Ramat Aviv, Tel Aviv, 69978
Israel

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Charles C. Y. Wang (Contact Author)

Harvard Business School (HBS) ( email )

Soldiers Field
Boston, MA 02163
United States

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