CFA Level I · CFA Level I Exam · Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
Which of the following is the best example of a stakeholder management infrastructure component that is part of the company's contractual infrastructure rather than its legal infrastructure?
A supplier agreement setting payment terms and delivery obligations is the best example of contractual infrastructure. Such agreements are negotiated between the firm and a stakeholder. Securities disclosure rules and courts belong to the external legal and regulatory infrastructure, not to firm-specific contracts.
- AA national securities regulator's disclosure rules
- BA supplier agreement specifying payment terms and delivery obligationsCorrect
- CA court system that hears shareholder lawsuits
Explanation
Contractual infrastructure consists of the agreements between the firm and its stakeholders, such as supplier contracts, employment contracts and loan agreements. Securities regulation and the courts are parts of the legal and regulatory framework imposed externally.
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