2016 GCGC

10-11 June 2016

Can Staggered Boards Improve Value? Evidence from the Massachusetts Natural Experiment


Robert M. Daines

Pritzker Professor of Law and Business Stanford Law School


Renee Adams

Professor of Finance
University of Oxford


We study the effect of staggered boards on long-run firm value using a natural experiment: a 1990 law that imposed a staggered board on all firms incorporated in Massachusetts. We find a significant and positive average (and median) increase in Tobins Q for innovating firms, particularly those facing greater Wall Street scrutiny. This increase in value appears to come, at least in part, from increased investment in R&D and capital expenditures and from valuable patents.

Our findings suggest that staggered boards can be beneficial when firms and investors face information asymmetries – when firms are young, innovating, and reliant on R&D.

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