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Research on Classified Boards Wins Top Faculty Award

Dong Chen, assistant professor of finance in the Merrick School of Business, received the school’s Outstanding Article of the Year Award for his 2012 publication, “Classified boards, the cost of debt, and firm performance,” in the prestigious Journal of Banking & Finance, an internationally recognized journal focusing on domestic and international financial institutions and markets. The award will be presented at the school’s annual Faculty Retreat in August.

Chen’s research paper looks at the effects of classified boards on creditors, and documents the ways that classified boards can substantially reduce the cost of company debt. The data he compiled, along with previous research, suggests  that among the largest 1,500 public firms in the U.S., 60 percent have a classified board structure (also known as staggered boards), which suggests the popularity of this governance practice.

“This raises the question of why firms adopt this governance practice,” Chen said. “Previous literature on classified boards has focused on their effect on shareholders. This is not surprising because shareholders are the owners of a corporation and one of the major capital providers. Perhaps because of the antitakeover effect of classified boards, the literature has generally documented a negative relation between board classification and firm performance. However, another more important capital provider of a large corporation is creditors, because most firms borrow more than they issue stocks. Therefore, it is equally if not more important to examine whether and how classified boards affect creditors.”

“Professor Chen has brought forth a new way of thinking about the effect of classified boards on creditors,” said Merrick School of Business Dean Darlene Smith. “His paper is among the first to examine the topic. His research is significant and will no doubt prove influential in that it analyzes how antitakeover mechanisms affect creditors and the cost of debt. We are so fortunate to have him on our faculty.”

Chen’s award was one of several presented to the faculty. Others are:

Awards for Outstanding Research and Scholarship

  • Doris and Robert McCurdy Chair: Kalyan Singhal, professor of management
  • Frank Baker Chair: Jaya Singhal, professor of decision science
  • Harry Y. Wright Chair: Hoang Nguyen, associate professor of finance
  • J. William Middendorf  Distinguished Professor: Dennis Pitta, professor of marketing
  • Lockheed Martin Chair: Lourdes White, professor of accounting

Awards for Excellence in Teaching and Research

  • Dean Clifford C. James Chair for Distinguished Teaching: Lisa Stickney, assistant professor of management
  • T. Rowe Price Excellence in Teaching (Economics or Finance):Barry Brownstein, professor of economics
  • Chase Bank Award for Economics and Finance Research: Nafeesa Yunus, assistant professor of finance and real estate

Awards for Outstanding Service to the University and Community At-large

  • Dean Daniel Costello Service Award: J.C. Weiss, executive in residence in entrepreneurship
  • G. Maxwell Armor Chair: Dalton Tong, executive in residence in accounting and Frank van Vliet, executive in residence in marketing


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