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Is the Staggered Board Debate Really Settled?: A Coda

In Settling the Staggered Board Debate published in the University of Pennsylvania Law Review, we concluded that the staggered board is not in and of itself value-increasing or decreasing and that “[t]he staggered board debate is . . . not about per se rules but whether the staggered board is right for individual firms.” We thought our conclusions settled the debate. We may have spoken too soon. In a response published in the University of Pennsylvania Law Review Online, Professors Cremers, Sepe, and Masconale assert that our analysis is flawed for two reasons: First, that our results are “based on statistical tests that have ‘poor power,’” claiming that the methodology we used in Settling the Staggered Board lacked robustness and was predisposed to its conclusions; Second, that “the adoption of a staggered board is associated with a positive increase in firm value,” even taking into account the results in Settling the Staggered Board Debate. In this Response (our response to the response) we reject the argument that our previous results were driven by poor power. And as to the argument that the staggered board is, on average, still associated with an increase in firm value, these conclusions rely on suspension of the efficient market hypothesis, since our responders’ results only occur years after the publicly announced adoption of the staggered board. Ultimately, our results again support the conclusion that the staggered board in and of itself has no effect on average firm value, reaffirming our original conclusion that it is firm characteristics which drive prior studies with respect to staggered board value.