Can Staggered Boards Improve Value? Causal Evidence from Massachusetts

52 Pages Posted: 10 Sep 2016 Last revised: 11 Jun 2021

See all articles by Robert Daines

Robert Daines

Stanford Law School; Stanford Graduate School of Business; European Corporate Governance Institute (ECGI)

Shelley Xin Li

University of Southern California - Marshall School of Business

Charles C. Y. Wang

Harvard Business School (HBS)

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Date Written: June 8, 2021


Staggered boards (SBs) are one of the most potent common entrenchment devices, and their value effects are considerably debated. We study SBs' effects on firm value, managerial behavior, and investor composition using a quasi-experimental setting: a 1990 law that imposed an SB on all Massachusetts-incorporated firms. The law led to an increase in Tobin's Q, investment in CAPEX and R&D, patents, higher-quality patented innovations, and resulted in higher profitability. These effects are concentrated in innovating firms, especially those facing greater Wall Street scrutiny. An increase in institutional and dedicated investors also accompanied the imposition of SBs, facilitating a longer-term orientation. The evidence suggests SBs can benefit early-life-cycle firms facing high information asymmetries by allowing their managers to focus on long-term investments and innovations.

Keywords: Staggered board; Entrenchment; Life-cycle; Tobin's Q; Investments; Innovation; Profitability; Institutional investors; Investor composition

JEL Classification: G18, G34, K22

Suggested Citation

Daines, Robert and Daines, Robert and Li, Xin and Wang, Charles C. Y., Can Staggered Boards Improve Value? Causal Evidence from Massachusetts (June 8, 2021). Harvard Business School Accounting & Management Unit Working Paper No. 16-105, Stanford Law and Economics Olin Working Paper No. 498, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 499/2017, Contemporary Accounting Research, Forthcoming, Available at SSRN: or

Robert Daines

Stanford Law School ( email )

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Stanford Graduate School of Business ( email )

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Xin Li

University of Southern California - Marshall School of Business ( email )

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Charles C. Y. Wang (Contact Author)

Harvard Business School (HBS) ( email )

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Boston, MA 02163
United States

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