The costs of entrenched boards
By: Lucian Bebchuk, Alma Cohen.
Contributors: Cohen, Alma.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10587; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10587.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Boards of directors -- Management.; Going public (Securities)
Description: "This paper investigates empirically how the value of publicly traded firms is overall affected by arrangements protecting management from removal.  A majority of U.S.  public companies have staggered boards that substantially insulate the board from removal via a hostile takeover or a proxy contest.  We find that staggered boards are associated with an economically significant reduction in firm value (as measured by Tobin's Q).  We also find evidence consistent with staggered boards' bringing about, and not merely reflecting, a lower firm value.  Finally, the correlation with reduced firm value is stronger for staggered boards established in the corporate charter (which shareholders cannot amend) than for staggered boards established in the company's bylaws (which can be amended by shareholders)"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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