Can Staggered Boards Improve Value? Causal Evidence from Massachusetts

Can Staggered Boards Improve Value? Causal Evidence from Massachusetts

Robert Daines, Shelley Xin Li, Charles Wang

Series number :

Serial Number: 

Date posted :

September 10 2016

Last revised :

June 15 2021
SSRN Share


  • Staggered board; Entrenchment • 
  • Life-cycle • 
  • Tobin's Q • 
  • investments • 
  • innovation • 
  • Profitability • 
  • institutional investors • 
  • Investor composition

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 an SB on all Massachusetts-incorporated firms. The law led to an increase in Tobin's Q, investment in CAPEX and R&D, patents, higher-quality patented innovations, and resulted 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 SBs can benefit early-life-cycle firms facing high information asymmetries by allowing their managers to focus on long-term investments and innovations.

Published in

Published in: 
Publication Title: 
Contemporary Accounting Research, Forthcoming


Real name:
Shelley Xin Li