Undoing the Powerful Anti-Takeover Force of Staggered Boards

45 Pages Posted: 19 Mar 2006  

Re-Jin Guo

University of Illinois at Chicago - Department of Finance

Timothy A. Kruse

Xavier University - Department of Finance

Tom Nohel

Loyola University of Chicago

Date Written: October 10, 2006

Abstract

We examine cases where managers announce an intention to de-stagger their boards via proxy proposals or board action. The literature has established the staggered board as the most consequential of all takeover defenses and one that destroys wealth. Thus, dismantling this structure should create value. We study the wealth effects and motives behind this change in governance within a conditional event study. We find that de-staggering the board creates wealth and that shareholder activism is an important catalyst for pushing through this change. Moreover, investor reaction shows a perception that de-staggering firms are more likely to be takeover targets.

Keywords: Staggered boards, Corporate governance, shareholder proposals

JEL Classification: G34

Suggested Citation

Guo, Re-Jin and Kruse, Timothy A. and Nohel, Tom, Undoing the Powerful Anti-Takeover Force of Staggered Boards (October 10, 2006). 2nd Annual Conference on Empirical Legal Studies Paper. Available at SSRN: https://ssrn.com/abstract=891534 or http://dx.doi.org/10.2139/ssrn.891534

Re-Jin J. Guo

University of Illinois at Chicago - Department of Finance ( email )

2431 University Hall (UH)
601 S. Morgan Street
Chicago, IL 60607-7124
United States
312-413-3718 (Phone)

Timothy A. Kruse (Contact Author)

Xavier University - Department of Finance ( email )

United States

Tom Nohel

Loyola University of Chicago ( email )

820 North Michigan Avenue
Chicago, IL 60611
United States
312-915-7065 (Phone)
312-915-8508 (Fax)

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