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2023/2024  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 cand.merc. and GMA (CM)
Course coordinator
  • Aleksandra Gregoric - Department of Strategy and Innovation (SI)
Main academic disciplines
  • Corporate governance
  • Economics
Teaching methods
  • Face-to-face teaching
Last updated on 01-06-2023

Relevant links

Learning objectives
  • 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 (both from standard economics and behavioral economics perspective)
  • 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
Prerequisites for registering for the exam (activities during the teaching period)
Number of compulsory activities which must be approved (see section 13 of the Programme Regulations): 1
Compulsory home assignments
The students need to get one out of two case analyses in groups approved in order to be registered for the exam.

Students will not have extra opportunities to get the required number of compulsory activities approved prior to the ordinary exam. If a student has not received approval of the required number of compulsory activities or has been ill, the student cannot participate in the ordinary exam.
If a student prior to the retake is still missing approval for the required number of compulsory activities and meets the pre-conditions set out in the program regulations, an extra assignment is possible.
The extra assignment is a 10 page home assignment that will cover the required number of compulsory activities. If approved, the student will be able to attend retake.
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-point grading scale
Examiner(s) One internal examiner
Exam period Summer
Aids Closed book: no aids
However, 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), and the student is allowed to bring simple writing and drawing utensils (non-digital). PLEASE NOTE: Students are not allowed to communicate with others during the exam.
Make-up exam/re-exam
Same examination form as the ordinary exam
The number of registered candidates for the make-up examination/re-take examination may warrant that it most appropriately be held as an oral examination. The programme office will inform the students if the make-up examination/re-take examination instead is held as an oral examination including a second examiner or external examiner.
Course content, structure and pedagogical approach

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 first discuss the theory on incentives and the current issues in the executive compensation. We then continue with 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 governance mechanisms. We look at the board of directors and discuss how it changes with the life cycle of the firm. We finally discuss how governance issues relate to the theory of the firm. For many of the topics, the standard economics literature will be complemented with findings from behavioral economics (behavioral agency). 

Description of the 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 01-06-2023