Can Staggered Boards Improve Value? Causal Evidence from Massachusetts*

• 成果类型: Article
• 署名作者: Daines, Robert; Li, Shelley Xin; Wang, Charles C. Y.
• 署名单位: Stanford University; University of Southern California; Harvard University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12709
• 发表日期: 2021
• 页码: 3053-3084
• 关键词: POWERFUL ANTITAKEOVER FORCE; corporate governance; institutional investors; Firm value; takeover laws; INNOVATION

摘要

Staggered boards (SBs) are one of the most potent common entrenchment devices, and their value effects are considerably debated. We study SBs' effects on firm value, managerial behavior, and investor composition using a quasi-experimental setting: a 1990 law that imposed SBs on all Massachusetts-incorporated firms. We find that relative to a matched control group of companies, for treated companies the law led to an increase in Tobin's Q, investment in capital expenditures and R&D, patents, and higher-quality patented innovations, resulting in higher profitability. These effects are concentrated in innovating firms, especially those facing greater Wall Street scrutiny. An increase in institutional and dedicated investors also accompanied the imposition of SBs, facilitating a longer-term orientation. The evidence suggests that SBs can benefit early-life-cycle firms facing high information asymmetries by allowing their managers to focus on long-term investments and innovations.