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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

Alma Cohen

Tel Aviv University - Eitan Berglas School of Economics; Harvard Law School; National Bureau of Economic Research (NBER)

Charles C. Y. Wang

Harvard Business School

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

Alma Cohen

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

Ramat Aviv, Tel Aviv, 69978
Israel

Harvard Law School ( email )

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

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Charles Wang (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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