Journal of Financial Services Research

, Volume 36, Issue 1, pp 1–19 | Cite as

Staggered Boards, Managerial Entrenchment, and Dividend Policy



Motivated by agency theory, we explore the potential impact of managerial entrenchment through staggered boards on dividend policy. The evidence suggests that firms with staggered boards are more likely to pay dividends. Among firms that pay dividends, those with staggered boards pay larger dividends. We also show that the impact of staggered boards on dividend payouts is substantially stronger (as much as two to three times larger) than the effect of all other corporate governance provisions combined. Overall, the evidence is consistent with the notion that dividends help alleviate agency conflicts. Thus, firms more vulnerable to managerial entrenchment, i.e., firms with staggered boards, rely more on dividends to mitigate agency costs. Aware of potential endogeneity, we demonstrate that staggered boards likely bring about, and are not merely associated with, larger dividend payouts. Our results are important, as they show that certain governance provisions have considerably more influence than others on critical corporate activities such as dividend payout decisions.


Dividends Classified boards Staggered boards Corporate governance 

JEL Classification

G30 G32 G35 


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Great Valley School of Graduate Professional StudiesPennsylvania State UniversityMalvernUSA
  2. 2.Business Administration DivisionMahidol University International College (MUIC)Salaya NakornpathomThailand

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