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The Costs of Entrenched Boards Lucian Bebchuk, Harvard Law School Alma Cohen Subsequently published in Journal of Financial Economics, Vol. 78, 2005, 409-433. Download the Paper (PDF format) - June 29, 2004 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing. ABSTRACT: This paper investigates empirically how the value of publicly traded firms is overall affected by arrangements protecting management from removal. In a majority of U.S. public companies, staggered boards substantially insulate the board from removal in either a hostile takeover or a proxy contest. We find that staggered boards are associated with a lower firm value (as measured by Tobin’s Q). We also find evidence consistent with the possibility that staggered boards bring about, and not merely reflect, an economically significant reduction in firm value. Finally, the correlation with reduced firm value is stronger for staggered boards that are established in the corporate charter (which shareholders cannot amend) than for staggered boards established in the company’s bylaws (which can be amended by shareholders). SUGGESTED CITATION: Lucian Bebchuk and Alma Cohen, "The Costs of Entrenched Boards" (June 29, 2004). Harvard Law School. Harvard Law School John M. Olin Center for Law, Economics and Business Discussion Paper Series. Paper 478. http://lsr.nellco.org/harvard/olin/papers/478 | REPOSITORY HOME  | SEARCH  | MY ACCOUNT  | NELLCO HOME | Powered by bepress.