- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 3. Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
- Subject 2. Corporate Governance Mechanisms
CFA Practice Question
A staggered board ______
II. may serve as an anti-takeover device.
III. may provide better continuity of board expertise than an annually elected board.
I. provides more flexibility in nominating new board members to meet changes in the marketplace than an annually elected board.
II. may serve as an anti-takeover device.
III. may provide better continuity of board expertise than an annually elected board.
Correct Answer: II and III
User Contributed Comments 6
| User | Comment |
|---|---|
| danlan | Why III? |
| mtcfa | Because only a portion of the board members (ie 1/3) are elected each year. This may provide better continuity than the alternative, which is to nominate 100% of the board members every year. |
| leo6fin | how is a staggered board an anti-takeover device? |
| vi2009 | leo6fin: anti-takeover device because any takeover attempts who want to get his own people into the board will need to wait for 2 years minimal ... staggered (see mtcfa) |
| schweitzdm | thanks vi2009 for that explanation. |
| khalifa92 | and cant take over the whole board at once |