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How do staggered boards affect shareholder value? Evidence from a natural experiment

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  • Cohen, Alma
  • Wang, Charles C.Y.
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    Abstract

    The well-established negative correlation between staggered boards (SBs) and firm value could be due to SBs leading to lower value or a reflection of low-value firms' greater propensity to maintain SBs. We analyze the causal question using a natural experiment involving two Delaware court rulings—separated by several weeks and going in opposite directions—that affected the antitakeover force of SBs. We contribute to the long-standing debate on staggered boards by presenting empirical evidence consistent with the market viewing SBs as leading to lower firm value for the affected firms.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Financial Economics.

    Volume (Year): 110 (2013)
    Issue (Month): 3 ()
    Pages: 627-641

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    Handle: RePEc:eee:jfinec:v:110:y:2013:i:3:p:627-641

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    Web page: http://www.elsevier.com/locate/inca/505576

    Related research

    Keywords: Corporate governance; Staggered board; Takeover defense; Antitakeover provision; Proxy fight; Tobin's; Firm value; Agency cost; Delaware; Chancery Court; Airgas;

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    References

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    Cited by:
    1. Lin, Ji-Chai & Stephens, Clifford P. & Wu, YiLin, 2014. "Limited attention, share repurchases, and takeover risk," Journal of Banking & Finance, Elsevier, vol. 42(C), pages 283-301.

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