Study Session 12: Corporate Finance (1)
Study Session 11: Corporate Finance (2)

Describe stakeholder management

Companies want to balance the interest of different stakeholders using the legal, contractual, organizational, and governmental infrastructure. 

  • Legal infrastructure refers to rights as per law and recourse available when they are violated. 
  • Contractual infrastructure refers to rights created by contractual relationships.
  • Organizational infrastructure refers to internal control, corporate governance practices, etc.
  • Governmental infrastructure refers to regulations imposed by the government.

While Anglo-American frameworks are more shareholder-friendly, frameworks in mainland Europe and Japan are more in line with stakeholder theory. However, there is a growing realization of a more inclusive corporate governance.