Certified Environmental Social and Governance Analyst (CESGA) EFFAS Practice Test 2025 - Free CESGA Practice Questions and Study Guide

The choice that identifies shareholders and investors as the stakeholder group most likely affected by a company’s governance practices is accurate because governance practices are fundamentally designed to oversee the company’s operations, strategic direction, and ethical standards. Shareholders and investors are directly impacted by how well a company is governed, as these practices influence company performance, risk management, and transparency. Good governance can enhance shareholder value by ensuring that the company acts in their best interests, while poor governance may lead to financial losses and decreased confidence in the management.

Management teams while also affected by governance practices do not represent the stakeholder group most significantly impacted by these practices in the same way that shareholders and investors are. Competitors might observe a company's governance but are not directly influenced by it, as they do not have a stake in the company’s internal decisions or performance. Thus, shareholders and investors stand out as the primary recipients of the outcomes of governance practices.