The booster of long-termism or the tool for major shareholders’ entrenchment? Evidence from staggered boards in emerging markets
研究交错董事会对中国A股公司真实盈余管理的影响，发现其加剧了盈余管理，且在大股东控制强、股权制衡弱、投资者保护不足时更显著，为新兴市场公司治理提供新证据。
Purpose Staggered boards serve as a critical corporate governance mechanism that significantly influences corporate behavior. While several studies have examined the governance effects of staggered boards in markets characterized by dispersed shareholdings, the implications in emerging markets with concentrated shareholdings – where conflicts of interest between large and small shareholders are more pronounced – remain inconclusive. This study aims to investigate the impact of staggered boards on real earnings management in emerging capital markets with high equity concentration, providing a novel institutional perspective on the role of staggered boards. Design/methodology/approach Based on data of Chinese A-share firms listed on the Shanghai and Shenzhen Stock Exchanges from 2011 to 2019, multivariate regression analyses of staggered boards on real earnings management are performed. A series of robustness tests are conducted to assess the reliability of the baseline results. These tests include replacing the explanatory variables, adding control variables, controlling for multidimensional fixed effects, employing alternative regression methods, utilizing instrumental variable techniques and performing both the Heckman test and propensity score matching. Findings This study finds that staggered boards significantly exacerbate real earnings management. The mechanism analysis indicates that staggered boards affect real earnings management by enhancing the entrenchment effect of large shareholders’ power in boards of directors. Additionally, the effect is more pronounced in firms with a high degree of controlling shareholder ownership, weak equity checks and balances, busy independent directors, low institutional shareholder ownership, low analyst attention and inadequate investor legal protection. Originality/value This study provides new empirical evidence on the governance effects of staggered boards in the context of equity concentration. It further explores the mechanism of the effect of staggered boards on real earnings management and refines the study of the governance effect of corporate charter, thereby aiding stakeholders in comprehensively assessing the role of staggered boards in corporate governance, especially in emerging market countries with less robust systems and weaker investor protection.