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Undoing the powerful anti-takeover force of staggered boards

  • Guo, Re-Jin
  • Kruse, Timothy A.
  • Nohel, Tom
Registered author(s):

    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 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.

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    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 14 (2008)
    Issue (Month): 3 (June)
    Pages: 274-288

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    Handle: RePEc:eee:corfin:v:14:y:2008:i:3:p:274-288
    Contact details of provider: Web page: http://www.elsevier.com/locate/jcorpfin

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