Shareholder activism is the process by which a shareholder of a publicly traded company seeks to exercise their rights in a way that will bring about change at the company. Shareholder activism can allow for a single activist investor to exert significant influence over a company’s performance. The influence from outside the company can disrupt corporate governance, especially in instances where the activist investors’ goals differ from the company.
In this article, Audit Analytics examines shareholder activism risk and how it is defined and categorized within its Accounting Quality + Risk Matrix (AQRM).
AQRM Red Flags: Auditors
AQRM Red Flags: Financial Reporting