Proceso productivo propiamente dicho

The above theoretical analysis suggests that the shareholder limited- commitment problem is likely to be most severe when corporate production involves the development of nonstandardized, innovative technology and relies more on firm-specific human capital—as happens in many of today’s

corporations.257 _{Accordingly, having a staggered board should be more}

strongly related to increased financial value for corporations with more innovation and long-term, specific investments.

This Article employs two variables to capture these features of corporate production: R&D—a proxy for the importance of long-term research and development projects (retrieved from Compustat), and Intangible Assets—a proxy for a firm’s level of information asymmetry (also retrieved from

Compustat). On the one hand, R&D is a standard measure of innovation,258 _and

encouraging managers to specifically invest in both physical assets and human capital is essential to innovating new products and operations. On the other hand, investments in intangible assets such as technological know-how, advertising, patents, software development, brand names, and trade secrets are all likely to figure prominently on the balance sheets of most modern corporations, although in different proportions and combinations. These investments typically involve an intrinsically higher level of informational asymmetry than tangible assets, whose production tends to follow more standardized investment plans.259 _{Hence, if long-term, specific investments can}

explain the positive impact of staggered boards on firm value, one would expect that impact to be greater in firms with higher levels of R&D and

Intangible Assets.

Table 3 below shows the results for pooled-panel Q regressions on

Staggered Board both with and without its interactions with R&D and Intangible Assets (plus the standard controls).

Table 3

Firm Value, Staggered Boards, and Proxies for Innovation and Intangible Assets*

Dependent Variable: Q Independent Variables: (1) (2) Staggered Board 0.071 ** _-0.024 (2.44) (-0.96) R&D 0.39 (0.56) Intangible Assets -0.143 (-1.64)

R&D * Staggered Board 1.956

**

(2.54)

Intangible Assets * Staggered Board 0.164

***

(3.51)

Fixed Effects: Year + Firm

N 30,979 27,519

R-Squared 0.72 0.74

258. See Edwin Mansfield, R&D and Innovation: Some Empirical Findings, in R&D,PATENTS,

AND PRODUCTIVITY 127, 127-29 (Zvi Griliches ed., 1984), http://www.nber.org /chapters/c10047.pdf.

* This Table presents the time-series associations between firm value and the presence of a staggered board using the full time period 1978-2011. All columns include the independent variable Staggered Boardplus the set of standard controls: Assets, ROA,

CAPX, R&D, and Industry M&A Volume. Column (1) adds the interaction between R&D

and Staggered Board, and Column (2) adds the interaction between Intangible Assets and

Staggered Board. Coefficients on standard controls are not shown in order to save space.

The estimates use pooled-panel Tobin’s Q regressions including both year and firm fixed effects. Variables are defined in Appendix Table A. Statistical significance of the coefficients is indicated at the 1%, 5%, and 10% levels by ***_, **_{, and} *_{, respectively, based} on robust standard errors clustered by firm.

The results of Table 3 strongly support the theoretical prediction that the adoption of a staggered board is more valuable to firms where the shareholders’ limited-commitment problem tends to be more severe, such as firms with more innovation and long-term specific investments. Indeed, these results show that a staggered board is related to changes in firm value considerably more strongly in firms with more R&D and Intangible Assets. For example, the interaction of R&D * Staggered Board (see Column (1)) has a positive and both statistically and economically significant coefficient. In particular, firms whose

R&D is one standard deviation higher than the mean (i.e., “high R&D” firms)

experience a 7.4% higher Q after staggering up relative to firms whose R&D is

at the mean.260 _{This result means that firms that are more invested in}

development and innovation benefit more from having a staggered board. Remarkably, as compared to the direct economic effect of Staggered Board, the

economic effect of Staggered Board for high R&D firms is nearly 11.9%.261

Likewise, firms with Intangible Assets (see Column (2)) that are one standard deviation higher than the mean present a 2.5% higher Q if they stagger up, relative to firms with average Intangible Assets.262 _{As for more innovative firms,}

this result means that firms engaged in investments that imply more

asymmetric information benefit more from having a staggered board.263

260. The economic significance of the interacted impact of R&D and Staggered Board on Q is calculated by dividing the regression coefficient of 1.956, times the standard deviation of R&D of 0.06, by the sample average Q during 1978-2011 of 1.58.

261. The total economic significance of Staggered Board on Q for high R&D firms is calculated by summing the economic significance of the interacted impact of R&D and

Staggered Board on Q (i.e., 7.4%) and adding the economic significance of Staggered Board

alone on Q. The latter is calculated by dividing the regression coefficient of 0.071 by 1.58 (the sample average Q during 1978-2011), which delivers 4.5%.

262. The economic significance of the interacted impact of Intangible Assets and Staggered

Board on Q is calculated by dividing the regression coefficient of 0.164, times the

standard deviation of Intangible Assets of 0.24, by the sample average Q during 1978-2011 of 1.58.

263. This evidence is consistent with prior finance studies documenting that investments in R&D and intangibles tend to be associated with higher firm value in the long term, while often being underestimated in the short term, which suggests the existence of