If a company offers more than one class of stock, corporate governance experts feel that:
A)that this is more democratic since some shares are more expensive than others.
B)that this is preferable in order to provide a special class of nonvoting stock to executives.
C)super-voting power allows for the election of directors that benefit a specific class of stock.
D)decisions made by the dual class system is more advantageous for the average investor.

Question

Quizplus · Accepted Answer

Corporate governance experts believe that offering more than one class of stock with super-voting power allows for the election of directors who benefit a specific class of stock. This can lead to conflicts of interest and negatively impact the decision-making power of minority shareholders. Therefore, offering multiple classes of stock should be done with caution and careful consideration of potential consequences.

If a Company Offers More Than One Class of Stock