TY - JOUR
T1 - Estimating the effect of entrenched boards on firm value using geographic identification
AU - Chintrakarn, Pandej
AU - Jiraporn, Pornsit
AU - Tong, Shenghui
AU - Chatjuthamard, Pattanaporn
N1 - Publisher Copyright:
© 2014 Elsevier Inc.
PY - 2015/2/1
Y1 - 2015/2/1
N2 - We show that firms located geographically close to one another share a similar probability of having staggered boards (or classified boards), an effect probably due to investor clientele, local competition, and social interactions. We then exploit the variation across the zip codes in the incidence of staggered boards and estimate the effect of staggered boards on firm value (measured by Tobin's Q). We use as our instrumental variable the proportion of firms located in the same zip code that have staggered boards, excluding firm i. The evidence shows that staggered boards reduce firm value significantly.
AB - We show that firms located geographically close to one another share a similar probability of having staggered boards (or classified boards), an effect probably due to investor clientele, local competition, and social interactions. We then exploit the variation across the zip codes in the incidence of staggered boards and estimate the effect of staggered boards on firm value (measured by Tobin's Q). We use as our instrumental variable the proportion of firms located in the same zip code that have staggered boards, excluding firm i. The evidence shows that staggered boards reduce firm value significantly.
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U2 - 10.1016/j.frl.2014.11.002
DO - 10.1016/j.frl.2014.11.002
M3 - Article
AN - SCOPUS:84922845830
SN - 1544-6123
VL - 12
SP - 109
EP - 116
JO - Finance Research Letters
JF - Finance Research Letters
ER -