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Subject 6. Factors Affecting Stakeholder Relationships and Corporate Governance PDF Download
Stakeholder relationships and corporate governance are continually shaped and influenced by a variety of market and non-market factors.

Market Factors

Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position.

Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management.

Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders.

Non-Market Factors

These factors include the legal environment, the media, and the corporate governance industry itself.

Learning Outcome Statements

g. describe market and non-market factors that can affect stakeholder relationships and corporate governance;

CFA® 2021 Level I Curriculum, 2021, Volume 4, Reading 31

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