- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 3. Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
- Subject 1. Shareholder Conflicts and Management
CFA Practice Question
Which statement is false?
B. Separating economic ownership from control is a sign of weak corporate governance.
C. It's possible for outside investors to dismantle dual-class structures.
A. The lack of voting power in a dual-class structure is usually well-disclosed, and is associated with a slightly lower stock price.
B. Separating economic ownership from control is a sign of weak corporate governance.
C. It's possible for outside investors to dismantle dual-class structures.
Correct Answer: C
Statement C is false. This is due to the inherent design of their unequal voting rights.
User Contributed Comments 1
| User | Comment |
|---|---|
| littlecow | Dual class stock structures are actually controversial. Supporters feel that the structure allows strong leadership to put long-term interests first while seeing beyond the near-term financial situation. Opponents feel it allows a small group of privileged shareholders to maintain control while other shareholders (with less voting power) provide the majority of the capital. |