Glossary: M02 — Investors and Stakeholders

Term	Definition
Stakeholder	Any individual or group with a vested interest in a company
Shareholder theory	Corporate governance focused on maximizing shareholder value
Stakeholder theory	Broader governance balancing interests of all stakeholder groups
Residual claim	Shareholders’ claim on net assets after all liabilities are settled
Financial leverage	Use of debt to amplify returns (and risk) on equity
ESG factors	Environmental, Social, and Governance considerations in investing
Stranded assets	Assets that lose value due to environmental or regulatory changes
Negative externality	Cost imposed on third parties not directly involved in a transaction