CFA Practice Question
Which of the following is correct?
A. For all firms, all classes of shares have equal voting rights.
B. There will be increased conflict of interest if directors are also employees of the firm.
C. Directors of a firm have a Fiduciary Duty to protect the interests of the employees.
Explanation: All shares do not have equal voting rights (for example the New York Times' shares)
User Contributed Comments 4
| User | Comment |
|---|---|
| gcollier | Dont get it... Directors are not employees of the firm? And whats wrong with C? |
| longnh9 | gcollier +1 |
| skarthi146 | I think Directors fiduciary duty is to increase shareholder value (I may mix up b/w management and directors). therefore if employees become directors (I assume board of directors) then there is higher chance for conflict of interest (between increasing shareholder value vs stakeholder value i.e employees) |
| Xuengzilam | Senior management have a fiduciary duty to maximize SHAREHOLDER VALUE, act in the best interest of OWNERS, NOT employee. |