CFA Level I · CFA Level I Exam · Investors and Other Stakeholders
Which group of corporate stakeholders is most likely to have a residual claim on a company's assets and cash flows after all other obligations have been met?
Common shareholders hold the residual claim. They are paid only after lenders, employees, suppliers and other contractual claimants have been satisfied, so their return depends on what remains. This is why they bear the greatest risk and generally have voting rights, unlike creditors with fixed claims.
- AEmployees
- BCommon shareholdersCorrect
- CSenior secured lenders
Explanation
Common shareholders are paid only after creditors and other contractual claimants, so they hold the residual claim and bear the most risk. Lenders and employees have contractual claims that rank ahead of shareholders' claim.
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