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2017/2018  KAN-CAEFO1074U  Firm Theory and Corporate Governance

English Title
Firm Theory and Corporate Governance

Course information

Language English
Course ECTS 7.5 ECTS
Type Mandatory
Level Full Degree Master
Duration One Semester
Start time of the course Spring
Timetable Course schedule will be posted at calendar.cbs.dk
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Aleksandra Gregoric - SI
Contact information: https:/​/​e-campus.dk/​studium/​kontakt
Main academic disciplines
  • Economics
Last updated on 31-05-2017

Relevant links

Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors: 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.

The final exam will be based on the following learning objectives, where the students must:
  • be able to discuss the concepts of incomplete contracts, moral hazard, asymmetry of information etc. and critically analyse the agency issues in public and private corporations
  • be able to identify the opportunities and potential pitfalls in the use of incentive based remuneration as a tool to motivate managers and to critically asses the efficiency of various incentive schemes
  • be able to identify the relevance of corporate laws in mitigating the agency problems in the corporations
  • be able to identify the benefits and downsides associated with various types of structures, such as corporations with concentrated ownership, family firms, etc. and to be able to critically assess the specifics of these governance structures in comparison to firms with dispersed ownership and control
  • be able to critically assess the structure of corporate boards and discuss its implications for board behaviour and firm performance
  • be able to identify and elaborate on the main barriers to efficient functioning of the board of directors and other corporate governance mechanisms (i.e. incentives, large owners, legal rules, cognitive biases and emotions, etc.)
  • be able to critically assess selected elements of governance codes, and to be able to apply these recommendations and the acquired knowledge of corporate governance to real world cases
Firm Theory and Corporate Governance:
Exam ECTS 7,5
Examination form Written sit-in exam on CBS' computers
Individual or group exam Individual exam
Assignment type Case based assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Summer
Aids Limited aids, see the list below:
The student is allowed to bring
  • Non-programmable, financial calculators: HP10bll+ or Texas BA II Plus
  • Language dictionaries in paper format
At all written sit-in exams the student has access to the basic IT application package (Microsoft Office (minus Excel), digital pen and paper, 7-zip file manager, Adobe Acrobat, Texlive, VLC player, Windows Media Player). PLEASE NOTE: Students are not allowed to communicate with others during the exam : Read more about exam aids and IT application packages here
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Course content and structure

An applied case-based economics course. It complements the courses Corporate Finance and Industrial Organization.
The course is a topic course, covering topical issues in corporate governance. We begin with a general introduction to agency problems in modern corporations and proceed to analyse governance solutions to these problems. We start by discussing the incentives and current issues in the executive compensation. We then continue with the ownership structure and the role of owners in firm governance, and give special attention to family firms. We also analyse how the legal framework facilitates and supports the functioning of the firms and the other governance mechanisms. We next look at the board of directors and discuss how it changes with the life cycle of the firm. We conclude by an introduction to the recent findings in the field of behavioral economics with specific focus on their relevance for organizations and governance.

Teaching methods
The format of the course is based on three elements:
1. Case analysis
2. Lectures and discussion on the newest relevant research in corporate governance.
3. Guest lectures by representatives of business community.
Feedback during the teaching period
Feedback will be provided either as part of group works or discussions in the class.
Student workload
Classes 33 hours
Exam 4 hours
Preparation 169 hours
Expected literature

Collection of cases and articles on corporate governance.

Last updated on 31-05-2017