Undoing the powerful anti-takeover force of staggered boards
AbstractWe 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 staggered boards benefits shareholders. 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, in the period preceding Sarbanes-Oxley, investor reaction indicates a perception that de-staggering firms are more likely to be takeover targets.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Corporate Finance.
Volume (Year): 14 (2008)
Issue (Month): 3 (June)
Contact details of provider:
Web page: http://www.elsevier.com/locate/jcorpfin
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lucian Arye Bebchuk & John C. Coates IV & Guhan Subramanian, 2002. "The Powerful Antitakeover Force of Staggered Boards: Theory, Evidence and Policy," NBER Working Papers 8974, National Bureau of Economic Research, Inc.
- Paul Gompers & Joy Ishii & Andrew Metrick, 2003.
"Corporate Governance And Equity Prices,"
The Quarterly Journal of Economics,
MIT Press, vol. 118(1), pages 107-155, February.
- Paul A. Gompers & Joy L. Ishii & Andrew Metrick, 2002. "Corporate Governance and Equity Prices," Center for Financial Institutions Working Papers 02-32, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Paul A. Gompers & Joy L. Ishii & Andrew Metrick, 2001. "Corporate Governance and Equity Prices," NBER Working Papers 8449, National Bureau of Economic Research, Inc.
- Daines, Robert & Klausner, Michael, 2001. "Do IPO Charters Maximize Firm Value? Antitakeover Protection in IPOs," Journal of Law, Economics and Organization, Oxford University Press, vol. 17(1), pages 83-120, April.
- Prabhala, N R, 1997. "Conditional Methods in Event Studies and an Equilibrium Justification for Standard Event-Study Procedures," Review of Financial Studies, Society for Financial Studies, vol. 10(1), pages 1-38.
- Linn, Scott C. & McConnell, John J., 1983. "An empirical investigation of the impact of `antitakeover' amendments on common stock prices," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 361-399, April.
- Schlingemann, Frederik P. & Stulz, Rene M. & Walkling, Ralph A., 2002. "Divestitures and the liquidity of the market for corporate assets," Journal of Financial Economics, Elsevier, vol. 64(1), pages 117-144, April.
- DeAngelo, Harry & Rice, Edward M., 1983. "Antitakeover charter amendments and stockholder wealth," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 329-359, April.
- K. J. Martijn Cremers & Vinay B. Nair, 2005. "Governance Mechanisms and Equity Prices," Journal of Finance, American Finance Association, vol. 60(6), pages 2859-2894, December.
- Lucian Bebchuk & Alma Cohen, 2004.
"The Costs of Entrenched Boards,"
NBER Working Papers
10587, National Bureau of Economic Research, Inc.
- Lucian Bebchuk, . "The Costs of Entrenched Boards," American Law & Economics Association Annual Meetings 1091, American Law & Economics Association.
- Comment, Robert & Schwert, G. William, 1995.
"Poison or placebo? Evidence on the deterrence and wealth effects of modern antitakeover measures,"
Journal of Financial Economics,
Elsevier, vol. 39(1), pages 3-43, September.
- Robert Comment & G. William Schwert, 1995. "Poison or Placebo? Evidence on the Deterrent and Wealth Effects of Modern Antitakeover Measures," NBER Working Papers 4316, National Bureau of Economic Research, Inc.
- Thomas, Randall S. & Cotter, James F., 2007. "Shareholder proposals in the new millennium: Shareholder support, board response, and market reaction," Journal of Corporate Finance, Elsevier, vol. 13(2-3), pages 368-391, June.
- Jarrell, Gregg A. & Poulsen, Annette B., 1987. "Shark repellents and stock prices : The effects of antitakeover amendments since 1980," Journal of Financial Economics, Elsevier, vol. 19(1), pages 127-168, September.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Agrawal, Anup & Mandelker, Gershon N., 1990. "Large Shareholders and the Monitoring of Managers: The Case of Antitakeover Charter Amendments," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 25(02), pages 143-161, June.
- John E. Core & Wayne R. Guay & Tjomme O. Rusticus, 2006. "Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Investors' Expectations," Journal of Finance, American Finance Association, vol. 61(2), pages 655-687, 04.
- Davis, Gerald F. & Kim, E. Han, 2007. "Business ties and proxy voting by mutual funds," Journal of Financial Economics, Elsevier, vol. 85(2), pages 552-570, August.
- Dittmar, Amy & Mahrt-Smith, Jan, 2007. "Corporate governance and the value of cash holdings," Journal of Financial Economics, Elsevier, vol. 83(3), pages 599-634, March.
- McWilliams, Victoria B, 1990. " Managerial Share Ownership and the Stock Price Effects of Antitakeover Amendment Proposals," Journal of Finance, American Finance Association, vol. 45(5), pages 1627-40, December.
- Nagpurnanand R. Prabhala, 1997. "Conditional Methods in Event-Studies and an Equilibrium Justification for Standard Event-Study Procedures," Yale School of Management Working Papers ysm55, Yale School of Management.
- McWilliams, Victoria B. & Sen, Nilanjan, 1997. "Board Monitoring and Antitakeover Amendments," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 32(04), pages 491-505, December.
- Guercio, Diane Del & Hawkins, Jennifer, 1999. "The motivation and impact of pension fund activism," Journal of Financial Economics, Elsevier, vol. 52(3), pages 293-340, June.
- Karpoff, Jonathan M. & Malatesta, Paul H., 1989. "The wealth effects of second-generation state takeover legislation," Journal of Financial Economics, Elsevier, vol. 25(2), pages 291-322, December.
- Acharya, Sankarshan, 1993. " Value of Latent Information: Alternative Event Study Methods," Journal of Finance, American Finance Association, vol. 48(1), pages 363-85, March.
- Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
- Bhagat, Sanjai & Jefferis, Richard H., 1991. "Voting power in the proxy process : The case of antitakeover charter amendments," Journal of Financial Economics, Elsevier, vol. 30(1), pages 193-225, November.
- Caspar Rose, 2012. "The new European shareholder rights directive: removing barriers and creating opportunities for more shareholder activism and democracy," Journal of Management and Governance, Springer, vol. 16(2), pages 269-284, May.
- Chen, Dong, 2012. "Classified boards, the cost of debt, and firm performance," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3346-3365.
- Fabel, Oliver & Kolmar, Martin, 2012. "Do parachutes discipline managers? An analysis of takeover battles," International Review of Law and Economics, Elsevier, vol. 32(2), pages 224-232.
- Ahn, Seoungpil & Shrestha, Keshab, 2013. "The differential effects of classified boards on firm value," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 3993-4013.
- Cohen, Alma & Wang, Charles C.Y., 2013. "How do staggered boards affect shareholder value? Evidence from a natural experiment," Journal of Financial Economics, Elsevier, vol. 110(3), pages 627-641.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.