The effect of staggered boards on firm value during market shocks

Abstract

This paper analyzes the effect of staggered boards on firm value during market shocks, adding to the ongoing debate regarding whether staggered boards are value-enhancing or value-destroying. To examine the relationship between staggered boards, market shocks, and firm value, this study employs several alterations of an ordinary least squares regression, controlling for various firm-level characteristics. The findings suggest no homogeneous association between staggered boards and firm value during market shocks. Instead, the effect depends on specific firm characteristics such as R&D intensity, size, and S&P 1500 membership. I show that especially small non-S&P 1500 firms benefit from a staggered board during market shocks. The results support the theory that the effect of staggered boards is heterogeneous and that firms should therefore be allowed to decide independently whether to stagger their boards.