Overview
In this module, conflicts of interest within the firm will be analyzed and mechanisms to mitigate these problems will be discussed. In the first part of the module, problems arising from asymmetric information and incomplete contracts will be analyzed. In the process we will shed light on a fundamental question in corporate governance about whether creating value for shareholders should be the firm’s first priority. This module will provide the theoretical background for the second part, where we discuss the evolution of different corporate governance systems around the world. In the third part, we highlight some recently discussed governance mechanisms. Special emphasis will be on the board of directors, the design of executive compensation contracts, growth of executive compensation, the role of shareholder activism and institutional investors, the market for corporate control, and decisions to lay off workers. Case studies and presentations by corporate officers will add practical aspects to round off your knowledge on corporate governance issues.
Students should develop a deep understanding of important issues in corporate governance and of its relevance in a social, political, and economic context.
The module would discuss:
- Know theoretical motivations for corporate governance.
- Apply the principal-agent model to corporate governance problems.
- Describe differences in corporate control across the world.
- Compare the main classifications of corporate governance systems.
- Know different corporate governance mechanisms; such as the board of directors and executive compensation.
- Critically assess the empirical evidence on the importance and effectiveness of various corporate governance mechanisms.
Faculty
Professor Vidhi Chhaochharia is a faculty member in the finance department at Miami Herbert Business School. Her main areas of research are corporate finance, corporate governance and international finance.
