Declassification of a firm's board tends to increase the market value of the firm's stock.

Question

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Declassification of a firm's board means that all members of the board are up for re-election every year instead of having staggered terms. This increases the company's accountability to shareholders and enhances their ability to influence the decision-making process. As a result, investors tend to view the company as more responsive to their needs, leading to an increase in the market value of the firm's stock.

Declassification of a Firm's Board Tends to Increase the Market