Thirty Years of Change: The Evolution of Classified Boards

We create a novel classified (staggered) board database covering all U.S. public firms from 1991 to 2020 and document significant differences in classified board usage over a firm’s life cycle depending on the decade the firm is aging or the year it goes public. While classified boards were rarely removed in the 1990s, firms that aged or went public during the following decades were more likely to declassify as they matured. Increased institutional ownership and scrutiny on governance appear to have contributed to this more dynamic adjustment over time, which recent theory predicts and our valuation analyses corroborate is value-maximizing.