Dr. Lubomir Litov, assistant professor of finance at the Eller College of Management at the University of Arizona, will present at the Ardis J. and Emmett M. Hanson Memorial Seminars in Finance. He will be discussing the paper “Staggered Boards and Firm Value, Revisted.”

This paper revisits the association between firm value (as proxied by Tobin’s Q) and whether the firm has a staggered board. Confirming prior studies, we find that in the cross-section firms with a staggered board tend to have a lower value. However, we obtain the opposite result in the time series: firms adopting a staggered board increase in value, while de-staggering is associated with a decrease in value. We further show that the decision to adopt a staggered board seems endogenous, and related to an ex ante lower firm value, which helps reconciling the existing cross-sectional results to our novel time series results. To explain our new results, we explore whether staggered boards may promote long-term value creation by serving as a credible longer-term commitment device by the shareholders. Consistent with this, we find that adopting a staggered board has a stronger positive association with firm value for firms where such longer-term commitment seems more relevant, i.e., firms with more R&D, more intangible assets, more innovative and larger and thus likely more complex firms.

This seminar is open to all CBA faculty and Ph.D. students. Please RSVP to the Jill Hallgren Havlat at the email address below.