CFA CFA Level 1 CFA Level 1 Question of the Week – Corporate Finance

CFA Level 1 Question of the Week – Corporate Finance

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    • Matt_AnalystPrep
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      Which one of the following statements is least accurate regarding shareholder rights?

      • A. Shareholders cannot vote without attending meetings.
      • B. Cumulative voting gives small shareholders more rights.
      • C. Shareholders do not like takeover defenses.
    • Matt_AnalystPrep
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      The correct answer is A.

      Shareholders can vote without attending meetings. Shareholders may vote at a meeting by attending in person but, in fact, most shareholders vote by “proxy” without being present in person.

      Options B is correct. Cumulative voting is a type of voting system that helps strengthen the ability of minority shareholders to elect a director. This method allows shareholders to cast all of their votes for a single nominee for the board of directors when the company has multiple openings on its board. 

      Option C is correct. Takeovers benefit investors but threaten incumbent, inefficient management. As such, takeover defenses are not well perceived by shareholders.

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