B2212 - CORPORATE GOVERNANCE: AN INTERNATIONAL PERSPECTIVE

Learning outcomes

The aim of the course is to present the main international models of corporate governance (bank- versus market-oriented) and their specific problems. The agency costs of separating ownership and control both in a public company and in firms with a concentrated ownership structure will be discussed along with possible internal and external solutions. An international comparison of investors' protection, the value of voting rights, economics and EU directives on insider trading and takeovers will also be presented.

Course contents

Program (and relative reading material)

1. Course introduction: International corporate governance models: Bank oriented (Japan, Germany, continental Europe) versus market oriented (US, UK). The anglosaxon model and the "public company". Agency costs from separation of ownership and control in a public company. External solutions: market for products, market for managers, market for corporate control. (Slides 1, REQ1, REQ2)

2. Agency costs from separation of ownership and control in a public company. Internal solutions: board of directors, debt, monitoring by institutional investors, incentive schemes. (Slides 2, REQ1, REQ2)

3. The US Enron scandal and the Sarbanes-Oxley Act (Slides 3, OPT1)

4. The Continental European Model: ownership-control separation through “legal devices". Major effects of Ownership/Control separation through legal devices. (Slides 4, OPT2)

5. Investors' protection around the world. The Law and Finance approach and its critics. Legal and non-legal tools for shareholder protection. (Slides 5, OPT-REQ1, OPT-REQ2, REQ3)

6. Corporate governance reforms and investors' protection in Italy. Self-expropriation in dual class-voting: a case study approach. (Slides 6, REQ4, REQ5)

7. The value of the voting right in dual class firms: theory and evidence (Slides 7, OPT-REQ3 )

8. The Financial Services Action Plan and major EU directives. Economics of Insider trading and the EU Market Abuse directive (Slides 8, OPT3)

9. Economics of Takeovers and the EU takeover directive (Slides 9, REQ6, OPT4).

Readings/Bibliography

The slides are the basic reading material. However, it is advisable to also read some of the indicated academic papers, mostly reviews of literature.

• All Slides used in class
• Denis D. K. and J.J. McConnell, 2003, “International corporate governance”, Journal of Financial and Quantitative Analysis, 38, 1-36.
• Schleifer and R. W. Vishny, 1997, “A Survey of Corporate Governance”, Journal of Finance 52, 737-783.
• Burkart M. and F. Panunzi, 2006, Takeovers, ECGI Working paper n. 118-2006.
• Adams, R., and D. Ferreira, 2008, “One share, one vote: The empirical evidence”, Review of Finance, 12, 51-91.
• La porta et al. (1998), “Law and Finance”, Journal of Political Economy, 106, 1113-1155.
• Rajan R. G. and L. Zingales (2003), “The great reversals: the politics of financial developments in the twentieth century”, Journal of Financial Economics 69, 5-50.
• M. Bigelli, S. Mengoli (2011), Self-expropriations versus self-interests in dual class voting”, Financial Management 40, 677-699.

Teaching methods

Lectures on different topics with slides and some videos. This course participates to the university's project on the didactical innovation.

 

Class attendance

You are strongly advised to attend all the lectures. The course is designed so to stimulate class interaction and discussion. Most of the insights will emerge during class rather than the simple reading of the required teaching material. A deep understanding of the slides and listed papers can only be achieved through class participation.

Assessment methods

The evaluation of attending students will we made by a final exam at the end of the course. The exam will be indicatively made of 20 multiple choices (20/30 points) and some small exercises (for a total of 10/30 points) (plus some extra multiple choices/exercise/open question for the Laude in case of 30/30 on the previous exam parts). Suggested exercise book: http://tinyurl.com/mkyledf (AMZ US) or http://tinyurl.com/kpvdq7g (AMZ ITA).

Numerical marks will be indicative of the following level of preparation:

• <18: Unsufficient
• 18−23: Sufficient
• 24−27: Good
• 28−30: Optimum
• 30 cum Laude: Excellent

Office hours

See the website of Marco Bigelli