Staggered Boards and the Value of Voting Rights | Zendy

Oğuzhan Karakaş | Zendy; Mahdi Mohseni | Zendy

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Staggered Boards and the Value of Voting Rights

Author(s) -

Oğuzhan Karakaş,

Mahdi Mohseni

Publication year - 2021

Publication title -

the review of corporate finance studies

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 4.292

H-Index - 14

eISSN - 2046-9136

pISSN - 2046-9128

DOI - 10.1093/rcfs/cfab004

Subject(s) - voting , value (mathematics) , business , economics , microeconomics , sample (material) , monetary economics , law , political science , mathematics , statistics , chemistry , chromatography , politics

This paper examines the impact of staggered boards on the value of voting rights (i.e., the voting premium) estimated using option prices. We find companies with staggered boards have a higher voting premium. Exploiting plausibly exogenous court rulings, we confirm that weakening the effectiveness of staggered boards decreases the voting premium. Given that the voting premium reflects private benefits consumption and associated managerial inefficiencies, our findings are consistent with the entrenchment view of staggered boards. Analyzing the cross-sectional heterogeneity in our sample, we find the entrenchment effect of staggered boards to be particularly pronounced for firms in noncompetitive industries and for mature firms. (JEL G13, G30, G34, K22)

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