478. Lucian Ayre Bebchuk & Alma Cohen, The Costs of Entrenched Boards, 06/2004; subsequently published in Journal of Financial Economics, Vol. 78, 2005, 409-433.
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).