The question of whether good governance makes for better returns has long been debated. Now a couple of legal scholars aim to prove that entrenching management does indeed hurt shareholder value.

The paper, authored by Lucian Bebchuk and Alma Cohen from Harvard Law School, aims to empirically test how the value of publicly traded firms is affected by arrangements that protect management. It notes that a majority of U.S. public companies have staggered boards that largely protect the board from being turfed out due to a hostile takeover or a proxy contest.

“We find that staggered boards are associated with an economically significant reduction in firm value. We also find evidence consistent with staggered boards’ bringing about, and not merely reflecting, a lower firm value,” they say. “Finally, the correlation with reduced firm value is stronger for staggered boards established in the corporate charter (which shareholders cannot amend) than for staggered boards established in the company’s bylaws (which can be amended by shareholders).”