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Department of Financial and Management Studies (DeFiMS)

Corporate governance

Course Code:
151030017
Unit value:
0.5
Year of study:
Year 3 of 3 or Year 4 of 4
Taught in:
Term 2

This course introduces the basic concepts of corporate governance and theory of the firm. It is specially designed for the undergraduate study of such areas as management, finance, financial law, corporate law, economics and related subjects. The course is designed to increase the depth of your understanding of corporate governance issues. As corporate governance is a multi-disciplinary subject – covering such topics as law, politics, management, finance, and economics - the course outlines the key theoretical and practical issues underpinning the study of corporate governance, and how they affect the governance of the modern corporation. International comparisons and differences in corporate governance are emphasised throughout the course.

Upon successful completion of this course, it is hoped that students will understand the key elements of corporate governance and its importance to the international economy. In order to achieve this, a strong emphasis is placed on the relationship between theoretical concepts and real world issues. It is therefore hoped that the course can make a real contribution to your in-depth understanding of the relevant corporate governance issues.

Objectives and learning outcomes of the course

At the end of this course students should be able to:

  • Outline and discuss the key legal, political and economic features of the major corporate governance systems found around the world;
  • Analyse how corporate governance systems influence performance, including both the performance of individual firms and the allocation of capital within a country;
  • Discuss the evolution of diverse ownership and governance structures across different economies;
  • Evaluate theories of the firm, and explain how they are relevant to the diverse range of ownership structures that exist in reality;
  • Address such practical questions, as how should the board of directors and executive teams be composed; how should executives and board of directors be remunerated given the legal, political and economic framework in the country; how do CEOs decide about the mix of debt and equity finance and how does the mix affect their discretion and control over cash flow?
  • Explain why the quality of corporate governance is relevant to capital formation;
  • Discuss the moral and social responsibility dimensions of corporate governance;
  • Describe why systematic failure of corporate governance can lead to failure of confidence that could spread from individual firms to entire markets or economies

Method of assessment

This course is assessed by 30% written coursework and 70% by one two hour examination

Suggested reading

Indicative Readings:

  • Robert Monks and Nell Minow (2008) Corporate Governance. Blackwell
  • Henry Hansmann (1996) The Ownership of Enterprises. Belknap Harvard
  • Laixiang Sun (2003) Ownership and Governance of Enterprises: Recent Innovative Developments. Palgrave
  • Steven Kaplan and Per Stromberg (2001) ‘Venture Capitalists as Principals: Contracting, Screening, and Monitoring’. American Economic Review AEA Papers & Proceedings, May
  • Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert Vishny (2000) ‘Investor Protection and Corporate Governance’, Journal of Financial Economics, vol. 58, no. 1: 3–27
  • Coffee, John C. Jr (2001) ‘The Rise of Dispersed Ownership: The Roles of Law and the State in the Separation of Ownership and Control’, The Yale Law Journal, vol. 111, no.1 (October) 1–82
  • Tiberghien, Yves (2007), Entrepreneurial States: Reforming Corporate Governance in France, Japan and Korea, Cornell University Press
  • Klapper, Leora F. and Inessa Love (2002) ‘Corporate Governance, Investor Protection, and Performance in Emerging Markets’, World Bank Policy Research Working Paper 2818, Washington DC: World Bank
  • Lang, H.P. (2001) ‘Why is Group Affiliation Profitable in Emerging Markets?’ Paper prepared for WIDER Project Meeting “Property Rights Regimes, Microeconomic Incentives and Development” in Helsinki, 20-21 April 2001
  • La Porta, R., F. Lopez-de-Silanes and A. Shleifer (1999) ‘Corporate Governance around the World’ Journal of Finance, 54 (2), April, 471–517
  • Miller, M.H. (1997) ‘Is American Corporate Governance Fatally Flawed?’ in Studies in International Corporate Finance and Governance Systems. A Comparison the U.S., Japan and Europe, edited by D.H. Chew, pp. 38–45, New York: Oxford University Press
  • Hillman, Amy J. and Thomas Dalziel (2003) ‘Boards of Directors and Firm Performance: Integrating Agency and Resource Dependence Perspectives’, Academy of Management Review, 2003, vol. 28, no. 3 (July): 383–96
  • Lipton, Martin and Jay W. Lorsch (1992) ‘A Modest Proposal for Improving Corporate Governance’, The Businesss Lawyer, 48, No 1, November
  • Lynall, Matthew D., Brian R. Golden and Amy J. Hillman (2003) ‘Board Composition from Adolescence to Maturity: A Multi-theoretic View’, Academy of Management Review, vol. 28, no. 3 (July): 416-31
  • Monks, Robert A.G. and Nell Minow (2004) Corporate Governance, Third edition, Oxford: Blackwell
  • Pettigrew, Andrew and Terry McNulty (1995) ‘Power and Influence in and Around the Boardroom 467’, Human Relations, vol. 48, no. 8: 845–73; reprinted in K. Keasey, S. Thompson and M. Wright (eds) (1999) Corporate Governance, Volume III, Cheltenham UK: Edward Elgar
  • Case Study (2005) ‘GE’s Two-Decade Transformation: Jack Welch’s Leadership’, Harvard Business School Case 399-150 revised
  • Khurana, Rakesh (2002) Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs, Princeton NJ: Princeton University Press
  • Bandow, D. 1992. Social responsibility: A conservative view. Business and Society Review, Spring
  • Singer, P (ed.) 1993 A Companion to Ethics. Oxford: Blackwell. Chapter 31
  • Adedaji, A. 1995: The challenge of pluralism, democracy, governance and development. The Courier March-April. EU, Brussels. 93-95
  • Balzer, A and Kröher, M; 2007. ‘The good company ranking of the Manager Magazin. In (eds) Hennigfeld et al. 2007. pp370-383
  • Dilling, O; Herburg, M; Winter G (eds) . 2008. Introduction. Responsible Business. Hart Publishing. Oxford and Portland Oregon. pp1-14
  • Korczak, P. and M.T. Bohl (2003) ‘Return, Performance, and Liquidity of Cross-Listed Central European Stocks’, Department of Economics Working Paper, European University Viadrina, Frankfurt, Germany
  • Monks, Robert A.G. and Nell Minow (2004) Corporate Governance, Third Edition, Oxford: Blackwell
  • Pagano, Marco, Ailsa Röell and Josef Zechner (1999) ‘The Geography of Equity Listing: Why Do Companies List Abroad?’ EFA 0171. Internet access: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=209313
  • The Daimler Chrysler Merger (2002: 4), Business Case, the Tuck School of Business at Dartmouth (http://mba.tuck.dartmouth.edu/pdf/2002-1-0071.pdf)