Staggered Boards Energize the Young, Bury the Old

No corporate-governance topic has been more heavily debated in recent years than the effect of staggered boards. Though staggered boards don’t unambiguously improve firm value, they may be valuable at a particular stage in a firm’s life cycle, findings of a recent study suggest. Staggered boards and insulation from shareholder intervention appears to be of more value to early-life-cycle firms and might “usefully be paired with sunset provisions that phase out these powerful insulating forces as firms mature,” says a recent working paper from the Harvard Business School. The authors studied a Massachusetts state law adopted in 1990 compelling organizations to adopt staggered boards. Authors examined the values of treated firms (firms that gained a staggered board because of the legislation) compared to similar control firms from 1984 to 2004.

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