Recent Board Declassifications: A Response to Cremers and Sepe

10 Pages Posted: 18 May 2017 Last revised: 22 May 2017

See all articles by Lucian A. Bebchuk

Lucian A. Bebchuk

Harvard Law School; European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

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)

Date Written: May 1, 2017

Abstract

This note offers an initial response to a study released earlier this month by Martijn Cremers and Simone Sepe, “Board Declassification Activism: The Financial Value of the Shareholder Rights Project.” Putting aside methodological questions about their analysis and accepting their results “as is,” we show that the results of this study do not provide a basis for opposing board declassifications. Appropriately interpreted, the results provide some significant evidence that declassifications are beneficial and no evidence that they are value-reducing. The results obtained for preceding years in prior published work by the authors either do not hold or are substantially reversed in the period examined by the current study. Overall, the results of the current study contradict and undermine the conclusions in the authors’ earlier published work in support of staggered boards.

JEL Classification: G32, G34, K22

Suggested Citation

Bebchuk, Lucian A. and Cohen, Alma, Recent Board Declassifications: A Response to Cremers and Sepe (May 1, 2017). Available at SSRN: https://ssrn.com/abstract=2970629 or http://dx.doi.org/10.2139/ssrn.2970629

Lucian A. Bebchuk (Contact Author)

Harvard Law School ( email )

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European Corporate Governance Institute (ECGI) ( email )

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National Bureau of Economic Research (NBER) ( email )

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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

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