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2011/2012  KAN-AEF_AE40  Firm Theory and Corporate Governance

English Title
Firm Theory and Corporate Governance

Course Information

Language English
Point 7,5 ECTS (225 SAT)
Type Mandatory
Level Full Degree Master
Duration One Semester
Course Period Spring
Time Table Please see course schedule at e-Campus
Study Board
Study Board for MSc in Economics and Business Administration
Course Coordinator
  • Aleksandra Gregoric - Department of International Economics and Management
Main Category of the Course
  • Economics, macro economics and managerial economics
Last updated on 29 maj 2012
Learning Objectives
Corporate governance deals with how firms are organized and, in particular, with the relationship between owners, managers and other stakeholders in a corporation. The main objective of this course is to equip students with a knowledge base in order for them to be able to understand and participate in the general decision making concerning governance activities in a corporation.

Upon completion of the course the students should be able to:
Understand the concept of agency cost and how agency issues relate to particular governance system;
Identify the role of corporate laws in shaping the governance environment for individual firms;
Identify the opportunities in various types of organizational structures, such as concentrated ownership, family firms and closely held corporations;
Identify the opportunities and potential pitfalls in use of incentive based remuneration for firm managers;
Understand the special role of a corporate board in a modern organization:
Identify the opportunities of private equity in relation to firm governance;
Understand the role of other stakeholders and the impact they can have on the decision making in the corporations;
Understand the differences in the corporate governance mechanisms across the world and the current challenges in the governance of a modern corporation.

The most important competency to be measured is the ability to apply the tools of corporate governance to real world cases.
Examination
Firm Theory and Corporate Governance
Firm Theory and Corporate Governance:
Assessment Written Exam
Marking Scale 7-step scale
Censorship No censorship
Exam Period April and May/June
Aids Closed Book
Duration 4 Hours
The exam has the form of three compulsory case preparations during the course on a pass/fail basis and an individual 4-hour written closed book exam with a case analysis starting two days before the exam date. All three case preparations must be passed prior to the registration for the 4-hour written exam. The regular exam takes place in April.
Prerequisites for Attending the Exam
3 compulsory case preparations during the course on a pass/fail basis.
Course Content

An applied case-based economics course. It complements the courses Corporate Finance and Industrial Organization.

The course is a topic course, covering various issues in corporate governance. We begin with a general introduction to corporate governance. After this introduction we proceed to discuss the legal approach to corporate governance, focusing on investor protection through regulation and corporate laws. We continue by analyzing firm ownership structure (concentrated ownership, control enhancing mechanisms, etc.) and the specifics of the governance of closely held corporations and family controlled firms. We next investigate the firms’ internal control mechanisms (incentives, boards of directors). Finally, we take a closer look at most actual governance issues, such as the governance aspects of private equity, bank governance, etc.

Teaching Methods
The format of the course is based on three elements:
1. Case analysis (i.e. in groups you will solve and present four business cases).
2. Lectures and discussion on the newest relevant research in corporate governance.
3. Guest lectures by representatives of business community.
Literature

Preliminary literature.
Collection of cases and articles on corporate governance.