Can Staggered Boards Improve Value? Causal Evidence from Massachusetts

52 Pages Posted: 3 Jul 2021 Last revised: 13 Apr 2022

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 14, 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. We find that relative to a matched control group of companies, for treated companies 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, Life-cycle, Tobin’s Q, Investments, Innovation, 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 14, 2021). Contemporary Accounting Research, Forthcoming, Stanford Law and Economics Olin Working Paper No. 568, Available at SSRN:

Robert Daines

Stanford Law School ( email )

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Stanford Graduate School of Business ( email )

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European Corporate Governance Institute (ECGI) ( email )

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Xin Li

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

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United States

Charles C. Y. Wang (Contact Author)

Harvard Business School (HBS) ( email )

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Boston, MA 02163
United States

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