- CFA Exams
- Level I 2020
- Study Session 10. Corporate Finance (1)
- Reading 31. Introduction to Corporate Governance and Other ESG Considerations
- Subject 6. Factors Affecting Stakeholder Relationships and Corporate Governance
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.
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.
These factors include the legal environment, the media, and the corporate governance industry itself.
Learning Outcome Statementsg. describe market and non-market factors that can affect stakeholder relationships and corporate governance;
CFA® Level I Curriculum, 2020, Volume 4, Reading 31
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