CFA Institute Exam ESG-Investing Topic 7 Question 14 Discussion

Actual exam question for CFA Institute's ESG-Investing exam

Question #: 14
Topic #: 7

[All ESG-Investing Questions]

The mechanism of dual-class shares most likely favors:

Ainstitutional investors.

Bminority shareholders.

Cthe founders of a company.

Show Suggested Answer

Suggested Answer: C

Dual-class share structures favor the founders of a company by granting them superior voting rights, often allowing them to retain control even if they hold a smaller economic interest in the company. (ESGTextBook[PallasCatFin], Chapter 5, Page 236)

by Alpha at May 02, 2025, 06:24 AM

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Odelia

1 months ago

Yes, that's true. Institutional investors may also prefer dual-class shares because they trust the founders' vision and leadership.

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Yuriko

1 months ago

But doesn't that mean minority shareholders have less say in decision-making?

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Ben

1 months ago

Institutional investors? Ha! They don't stand a chance against the founder's iron grip. This is all about keeping power in the hands of the few. C for the win!

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Reed

2 months ago

Ohh, this is a tricky one. I'm going to guess C - the founders. They get to call the shots while the rest of us just watch from the sidelines.

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Felicitas

1 months ago

Yeah, it's a way for them to maintain control over the company even with a smaller ownership stake.

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Billy

1 months ago

I think you're right, the founders definitely benefit from dual-class shares.

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2 months ago

C) The founders of a company

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