A Lapse of Concentration Omitted Variables, Board Structure and Firm Performance
Date
2004-10Type of Work
54 pagesText
conference papers and proceedings preprints
Citation of Original Publication
Morgan Joseph Rose, A Lapse of Concentration: Omitted Variables, Board Structure and Firm Performance, https://pdfs.semanticscholar.org/82db/9b12afaeb3e45c071348de27f880ed3e1409.pdf?_ga=2.74164816.394368685.1593545506-2145448185.1585330375Rights
This item is likely protected under Title 17 of the U.S. Copyright Law. Unless on a Creative Commons license, for uses protected by Copyright Law, contact the copyright holder or the author.Abstract
Previous analyses of the relationship between board structure and firm performance have not considered how that relationship is affected by external ownership concentration. This paper illustrates how, as a result of this omission, estimates of the impact of
staggered boards on firm performance have been biased downward. Including external ownership concentration also allows for the first time an examination of the interactions of that variable and board structure, permitting more informative empirical tests of
whether, and in what circumstances, effective staggered boards (ESBs) benefit shareholders. Evidence from those tests is consistent with the hypothesis that ESBs represent credible commitments on the part of shareholders not to act opportunistically,
and so enhance firm performance.