FIN 630 (FIN 6300): Corporate Governance
Contents
In this course, conflicts of interest between the firm and its stakeholders will be analyzed and mechanisms to mitigate these conflicts will be discussed. In the first part of the course, theoretical models on information asymmetries and corporate governance problems are discussed. The second part of the course will focus on common corporate governance problems and different institutional governance frameworks and ownership structures across countries. A special focus will be on the German Corporate Governance Code. Finally, we examine several internal and external governance mechanisms, including the market for corporate control, activist investors, executive compensation, and the role of the board of directors. Special emphasis will be on the valuation effect of corporate governance and the question whether some corporate governance mechanisms are superior to others.
Learning outcomes
Students should develop an understanding of important issues in corporate governance and of its relevance in a social, political, and economic context. They will be able to apply theoretical models on principal-agent conflicts to different corporate governance problems. Furthermore, students will know how to assess the effectiveness of different corporate governance mechanisms. In addition to their knowledge on corporate governance theory, they will be able to critically discuss the empirical evidence on the importance and effectiveness of various corporate governance mechanisms.s.
Necessary prerequisites
–
Recommended prerequisites
Knowledge in business economics (Module BE 510, BE 511 or equivalent courses) and econometrics (Module CC 502, CC 503 or equivalent courses) is highly recommended. Introductory course in corporate finance on the level of Brealey, Myers and Allen, Corporate Finance, (McGraw-Hill, 10th edition, 2010) is also strongly recommended.
| Forms of teaching and learning | Contact hours | Independent study time |
|---|---|---|
| Lecture | 2 SWS | 9 SWS |
| Exercise class | 1 SWS | 5 SWS |
| ECTS credits | 6 |
| Graded | yes |
| Workload | 180h |
| Language | English |
| Form of assessment | Written exam (60 min) |
| Restricted admission | no |
| Further information | – |
Examiner Performing lecturer |  | Prof. Dr. Alexandra Niessen-Ruenzi Prof. Dr. Alexandra Niessen-Ruenzi / Dr. Pia Lünstroth |
| Frequency of offering | Fall semester |
| Duration of module | 1 semester |
| Range of application | M.Sc. MMM, M.Sc. WiPäd, M.Sc. VWL, M.Sc. Wirt. Inf., M.Sc. Wirt. Math., MAKUWI, M.Sc. MMFACT, M.Sc. MMOSCM |
| Preliminary course work | – |
| Literature | Main textbooks: Goergen, M. (2018), Corporate Governance. A Global Perspective, Cengage Learning EMEA. Thomsen, S. and M. Conyon (2012), Corporate Governance: Mechanisms and Systems, McGraw-Hill Education, Oxford. Larcker, D. and B. Tayan (2015), Corporate Governance Matters 2nd Edition, Pearson Education, London. Other helpful sources: Tirole, J. (2006), The Theory of Corporate Finance, Princeton University Press, Princeton, NJ. Bolton, P. and M. Dewatripont (2005), Contract Theory, MIT Press, Cambridge, MA. Milgrom, P. and J. Roberts (1992), Economics, Organization, and Management, Prentice Hall, Englewood Cliffs, NJ. Other research papers provided at the end of each set of lecture notes. |
| Course outline | Introduction, definitions, and the collapse of Lehman Brothers Principal Agent Theory Information asymmetries Misaligned Interests and the ENRON scandal Taxonomy of Corporate Governance Systems International Corporate Governance Systems Ownership and Control Internal governance I: The board of directors Internal governance II: Executive compensation contracts External governance I: Institutional investors and shareholder activism External governance II: Market for corporate control and product market competition |