Faculty
Steffen Brenner

Course Coordinator
Steffen Brenner

None

The current financial crisis has raised important questions concerning the control and responsibility of the owners and the managers especially in banks and large corporations. Many of these questions are closely related to the discussion about good corporate governance - understood as the system by which companies are directed and controlled.

The course starts with a discussion about the different concepts about corporate governance. What is the role of the owners versus management? How do different stakeholders influence the company?

The course will analyze governance problems as a type of agency problems, where the main problem concerns the possible conflict of interest between the owners (principal) and the manager (agent). However, in a broader perspective we will analyze the role of different stakeholders: managers, employees, different types of investors, creditors, suppliers, customers, competitors, local and central government, etc.

The different institutions in a given country play a crucial role and the course introduces students to the mechanisms of governance in different systems comparing US-UK, East Asia, Continental Europe and Scandinavia. Students learn the costs and benefits of alternative governance mechanisms – law, ownership, boards, incentives etc.

The actual organization of corporate governance in the company is also an important theme to be discussed in the class. This includes the role of managers, boards, shareholders, what makes a good board? We will also analyze the role of legislation and Corporate Governance codes of best practices now introduced in most countries. In recent years the question about Corporate Social Responsibility has gained increasing importance – how is the relation between social responsibility and corporate governance?

The teaching style will be a mix of lectures, cases and class discussions.

The course will develop the student’s ability to understand the basic problems related to corporate governance and evaluate the pros and cons of different governance mechanisms. The course gives the student the possibility to combine different disciplines such as economics, finance, organization, law etc. in the overall analysis of how a company is governed by the owners and influenced by other stakeholders.

The aim of this course is to gain an in-depth understanding of corporate governance and how corporate governance influences corporate performance. The course will introduce the students to corporate governance issues and teach them to analyze how different corporate governance mechanisms – like ownership and board structure, legal systems and incentives – contribute to the solution of agency problems and influence corporate economic performance. The students shall acquire skills and competences which make them able to evaluate the corporate governance structure of a given company. More precisely the participants shall be able to:

- explain different concepts of corporate governance

- learn how to identify and analyze corporate governance (agency) problems.

- analyze how corporate governance of a particular company influences its performance

- analyze the role of different stakeholders: managers, employees, investors, creditors,

suppliers, customers, competitors, local and central government, etc.

- understand the role of managers, boards, shareholders, general meetings

- Learn to appreciate how the governance, behaviour and performance of individual

companies are shaped by the governance system, in which they operate.

- analyze how different governance mechanisms solve/limit the governance problems

- identify different models of corporate governance in different countries

- understand the role of Corporate Social Responsibility.

4 hours written closed book exam

Steen Thomsen: An Introduction to Corporate Governance – Mechanisms and Systems. DJØFs forlag, 2008

Becht, Bolton and Röell (2002): Corporate Governance and Control,

European Corporate Governance Institute, Financial Working Paper no. 02

Thomsen, Rose and Risager (eds): 2009, Understanding the financial crisis. Investment, Risk and Governance, Sim Corp, Strategy lap.

Articles:

Denis D.K. and J.J. McConnell: 2003 International Corporate Governance:

Journal of Financial and Quantitative Analysis, vol 36, no 1, March.

Copenhagen Stock Exchange (2003): “The Report on Corporate Governance in Denmark”, www.corporategovernance.dk

La Porta et al. (1998), Law and finance, Journal of Political Economy, 106, pp. 1113-1154

La Porta et al. (2000), Investor protection and corporate governance, Journal of Financial Economics, 58, pp 3-27

Montgomery C.A. & R.Kaufman: The Board’d Missing Link, Harvard Business Review, pp 86-93, March 2003

Nadler D.A.(2004):Building Better Boards, Harvard Business Review, May 2004,p102-111

Pettit, Justin (1998) “Governing for value”, Ivey Business Quarterly, Autumn 63, 1.

Rose, Caspar: Stakeholder versus shareholder value – a matter of contractual failures, (2004), European Journal of law and Economics, 18, pp.77-97

Shleifer A. and R. W. Vishny (1997): A Survey of Corporate Governance,

The Journal of Finance, vol LII, no 2, June, pp. 737-783.

Sonnenfeld J. A.: What Makes Great Boards Great, Harvard Business Review, Sept 2002

Weimer J. and J. C. Pape: A Taxonomy of Systems of Corporate Governance,

Corporate Governance, Vol 7 no 2, April 1999.