- CFA Exams
- 2021 CFA Level I Exam
- Study Session 10. Corporate Finance (1)
- Reading 31. Introduction to Corporate Governance and Other ESG Considerations
- Subject 5. Board of Directors and Committees
CFA Practice Question
True or False? A classified board is a good sign of corporate governance.
Correct Answer: False
Staggered terms for board members on a classified board make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board.
User Contributed Comments 3
| User | Comment |
|---|---|
| danlan2 | Classified=staggered |
| group | Classified boards are often referred to as "staggered boards". Staggered boards need not be classified, but classified boards are inherently staggered. Then why staggered boards are better than classified simply because classified board members term is between 1 and 8 years which often result in board member complacency and forces directors to develop close reltation with the management. |
| joywind | thanks for group's post |