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Media type:
E-Article
Title:
Classified boards and firm value revisited
Contributor:
Stráska, Miroslava;
Waller, Gregory
Published:
Virtus Interpress, 2011
Published in:
Corporate Ownership and Control, 8 (2011) 3, Seite 69-85
Language:
English
DOI:
10.22495/cocv8i3p6
ISSN:
1810-3057;
1727-9232
Origination:
Footnote:
Description:
We reexamine the negative relation between firm value and board classification. We document that firms with characteristics indicating low power to bargain for favorable terms in a takeover, but also indicating high potential agency costs, are more likely to have a classified board in place. We also find that among these firms, those with classified boards have higher valuation, as measured by Tobin’s Q. This result is robust to various controls for endogeneity. Our evidence suggests that adopting a classified board is beneficial for certain firms and challenges the commonplace view that board classification is an antitakeover device that necessarily harms shareholders.