All units give a morale boost. If you have 3 units in a certain area and the enemy has six you'll have a fairly large moral penalty, and they get a bonus.

There might be bonuses for having a friendly unit on the flank or to the rear, I could be mixing this up with gettysburg though.

I think the morale penalty for a cavalry charge is double. Extra points for charging when the enemy unit is disorganized, charging from flank, or charging from rear.