This study examines how classified boards affect workplace safety, an important dimension of employee welfare. Using comprehensive establishment-level injury data from the U.S. Occupational Safety and Health Administration and a novel classified board database, we document that firms with classified boards experience 12-13% lower workplace injury rates. To establish causality, we employ instrumental variable and difference-in-differences approaches exploiting staggered board declassifications. The safety benefits of classified boards operate through increased safety expenditures, reduced employee workloads, and enhanced external monitoring through analyst coverage. These effects are strongest in financially constrained firms and those with weaker monitoring mechanisms. Our findings support the bonding hypothesis that anti-takeover provisions facilitate long-term value creation by protecting stakeholder relationships and provide novel evidence that classified boards benefit rank-and-file employees, not just executives and major customers. The results reveal an important mechanism through which governance structures impact employee welfare and challenge the conventional view that classified boards primarily serve managerial entrenchment.

This paper examines the optimal path of dividend policy adjustments for a growth company facing the likely threat of takeover. Departing from the common framework of inefficient managers resisting takeover attempts, the formal analysis here focuses on defensive payout strategy of value-maximizing management under the circumstances of random stock market valuation errors, and the bidders’ perceived synergistic gains. A dynamic model, incorporating acquisition activity stochastically, is formulated for a growth firm drawing funds from both internal and external sources. An optimal “bang-bang” reinvestment strategy is derived with control theory, and it is found to be consistent with the firm’s objective of stock-value-maximization. It is also shown theoretically that an immediate threat of takeover shortens managerial planning horizon. The model provides an explanation of dividend adjustment behavior observed in growth firms, and offers an insight into the impact of anti-takeover costs on the firm’s value over time.