Do Staggered Boards Harm Shareholders?

Abstract

We examine Cohen and Wang’s (JFE 2013, CW) conclusion that a staggered board (SB) lowers firm value based on the stock price reaction to two 2010 Delaware court rulings in the Airgas case, the first weakening the potency of an SB and the second restoring it. We find that CW’s results, for their sample, become insignificant after excluding a few penny stocks, or stocks with value below $10 million, or over-the-counter (non-exchange) stocks. The effects of the rulings are also insignificant for an alternative sample.

Keywords: staggered board, classified board, corporate governance, antitakeover measures

JEL Classification: G34, K22