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Open AccessArticle

How Does a Staggered Board Provision Affect Corporate Strategic Change?—Evidence from China’s Listed Companies

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College of Business Administration, Capital University of Economics and Business, Beijing 100070, China
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China Academy of Corporate Governance, Nankai University, Tianjing 300071, China
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School of Management, Guangdong University of Technology, Guangzhou 510520, China
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Department of Finance, Business School, Shantou University, Shantou 515063, China
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Research Institute for Guangdong-Taiwan Business Cooperation, Shantou University, Shantou 515063, China
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Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528402, China
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Research Center for Environment and Sustainable Development of China Civil Aviation, Civil Aviation University of China, Tianjin 300300, China
*
Authors to whom correspondence should be addressed.
Sustainability 2018, 10(5), 1412; https://doi.org/10.3390/su10051412
Received: 20 April 2018 / Revised: 30 April 2018 / Accepted: 1 May 2018 / Published: 3 May 2018
(This article belongs to the Special Issue Internet Finance, Green Finance and Sustainability)
As China’s capital market has become more and more developed, listed companies have begun to establish some anti-takeover provisions to protect their controlling right. Existing studies have examined the consequences of the establishment of such provisions. However, few studies have explored how these provisions affect corporate strategic change. Based on agency theory and prospect theory, this paper proposes two channels through which one of the anti-takeover provisions, staggered board provision, impacts strategic change. Using the data of China’s listed companies which issue A-shares in Shenzhen and Shanghai stock exchanges from 2007 to 2014, these two channels are tested. We find that the existence of a staggered board provision negatively affects the extent of strategic change. In addition, if governance mechanisms restrict directors’ power, the relationship between staggered board provision and strategic change will be weakened, which supports the agency theory. If the listed company is faced with a more dynamic external environment, the relationship between staggered board provision and strategic change will be stronger, which supports the prospect theory. These results are robust after we use a different method to measure strategic change. Our conclusions not only enrich literature about strategic change and anti-takeover provisions, but also are helpful for improving corporate governance in China and other developing countries. View Full-Text
Keywords: staggered board provision; strategic change; corporate governance; environment dynamism; anti-takeover provision; Ethics in finance; sustainable finance staggered board provision; strategic change; corporate governance; environment dynamism; anti-takeover provision; Ethics in finance; sustainable finance
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Wang, K.; Xue, K.-K.; Xu, J.-H.; Chu, C.-C.; Tsai, S.-B.; Fan, H.-J.; Wang, Z.-Y.; Wang, J. How Does a Staggered Board Provision Affect Corporate Strategic Change?—Evidence from China’s Listed Companies. Sustainability 2018, 10, 1412.

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