Page 10 - FINAL CFA SLIDES DECEMBER 2018 DAY 11
P. 10
Session Unit 10:
34. Corporate Governance and ESG: An Introduction
LOS 34.h: Identify potential risks of poor corporate governance and stakeholder management and
identify benefits from effective corporate governance and stakeholder management., p.9
Risks of poor governance and stakeholder management
• Some stakeholders can gain an advantage, to the disadvantage of other
stakeholders.
• Accounting fraud, or poor recordkeeping = negative implications for performance
and value. tanties
• Agency problems –management incentive compensation not aligned with
shareholders goals.
• Poor compliance with regulation and reporting can easily lead to legal and
reputational risks -failure to manage creditors’ rights can lead to debt default and
bankruptcy.
Reverse is true for good corporate governance and stakeholder
management
