Impact of Long-Serving Directors on Corporate Governance

Hard Corporate Governance Board Of Directors

Corporate governance is critical for effective management and oversight of company operations. The Board of Directors (BOD) plays a pivotal role in ensuring that a company adheres to legal and ethical standards while also pursuing strategic objectives. Consider the following scenario: A publicly traded company is facing increasing scrutiny due to poor financial performance and governance practices. Several shareholder activists have called for the resignation of certain board members who have served multiple consecutive terms.

In this context, which of the following best describes a potential consequence of having long-serving members on the Board of Directors?

Long-serving board members often bring extensive experience and stability, which can enhance the board's effectiveness in strategic decision-making.

Long-serving board members may lead to entrenched interests and groupthink, undermining the board's ability to challenge management effectively.

Long-serving members typically ensure compliance with regulations, reducing the risk of governance violations.

Hint

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