- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 3. Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
- Subject 3. Corporate Governance Risks and Benefits
CFA Practice Question
Which of the following most accurately reflects an analyst's sentiments towards board composition?
A. A board whose membership is made up of a significant number of long-tenured individuals adapts to change better than one with short-tenured members.
B. Once an optimal board structure is derived, there is no need to change the board membership to adjust to changing business needs.
C. Analysts attempt to determine whether the experiences and skill sets of board members are aligned to the current and future needs of a company.
Explanation: Analysts are concerned with whether or not a company's board membership is aligned to a company's needs, both now and in the future.
Long-tenured board members are usually slower to adapt to changing circumstances.
There is no such thing as an optimal board structure. It makes economic sense for a board membership to change with changing times.
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