34546 - International Corporate Governance

Learning outcomes

The student can compare the main international models of corporate governance and their specific problems. He is focused also on the minority shareholders' protection and on the integration of the European Financial markets through the recent harmonization of financial regulation.

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).

10.  The Nabisco takeover and the movie "Barbarians at the gates" (if there will be enough time)

Readings/Bibliography

Required reading material (REQ)

• All Slides used in class (numbered according to the lectures' numbers)
• REQ1: Denis D. K. and J.J. McConnell, 2003, “International corporate governance”, Journal of Financial and Quantitative Analysis, 38, 1-36.
• REQ2: Schleifer and R. W. Vishny, 1997, “A Survey of Corporate Governance“, Journal of Finance 52, 737-783.
• REQ3: Enriques L. and P. Volpin, 2007, “Corporate Governance Reforms in Continental Europe“, Journal of Economic Perspectives 21, 117-140.
• REQ4: Barbi M., M. Bigelli, S. Mengoli, “Italian Corporate Governance”, in “The Handbook of International Corporate Governance: A Definitive Guide”, 2nd edition May 2009, The Institute of Directors, Kogan Page, London.
• REQ5: M. Bigelli, S. Mengoli (2011), Self-expropriations versus self-interests in dual class voting”, Financial Management 40, 677-699
• REQ6: Burkart M. and F. Panunzi, 2006, Takeovers, ECGI Working paper n. 118-2006.

 

 

Clamda-IM students with an attendance waiver approved by Clamda Board:

Extra required reading material for non-attending students taking the exam in the official exam sessions (January-February and September)  rather than at the end of the course (OPT-REQ)

• OPT-REQ1: La porta et al. (1998), “Law and Finance”, Journal of Political Economy, 106, 1113-1155.
• OPT-REQ2: 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.
• OPT-REQ3 Adams, R., and D. Ferreira, 2008, “One share, one vote: The empirical evidence”, Review of Finance, 12, 51-91.

 

 

Optional reading material (OPT) –Not required but helpful to expand some topics -

• OPT1: Sarbanes-Oxley Act
• OPT2: Bigelli M., V. Mehrotra and R. Rau, 2012, “Why are shareholders not paid to give up their voting privileges? Unique evidence from Italy”, Journal of Corporate Finance 17, 1619-1635.
• OPT3: Enriques L. and M. Gatti (2006), EC Reforms of Corporate Governance and Capital Markets Law: Do they Tackle Insiders'Opportunism?, working paper.
• OPT4: Taleover directive
  

Teaching methods

Lectures on different topics with slides and some videos.

Class attendance

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

Please note that a minimum of 70% attendance is a requirement of the course and failure to meet this will result in the student not being allowed to sit the exam.

Assessment methods

Final exam and grading for attending students Final exam The evaluation of attending students will we made by a final exam at the end of the course (in November). The exam will be indicatively made of 20 multiple choices (20/30 points) and some small exercises (for a total of 10/30 points) and will last 1 hour.   Re-take exams

The first exam session will be in December (third week). Re-take exams will take place during January-February and September. Since the corporate governance exam is part of a comprehensive exam, which includes three course-modules (Corporate Governance, Financial Laboratory and Risk Management), it will be delivered along with the other two modules of the integrated course. In the exam and retake exam sessions, students can take either one (or two) of the modules or the whole integrated exam (made up of three modules). The corporate governance exam-part will be either in the form of the pre-exam or in a different form as, for example, some open questions. In the second and third exam sessions (i.e., January-February and September) students will have to study also the following material:

• OPT-REQ1: La porta et al. (1998), “Law and Finance”, Journal of Political Economy, 106, 1113-1155.
• OPT-REQ2: 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.
• OPT-REQ3 Adams, R., and D. Ferreira, 2008, “One share, one vote: The empirical evidence”, Review of Finance, 12, 51-91.

 

Exam registration policy for the whole integrated exam of Corporate Finance

• The final grade for the integrated course (Corporate finance) will be computed as a credit-weighted average of the three modules.
• All positive grades for the integrated exam will be automatically registered within two weeks from grading unless students ask not to proceed.
• In the re-take exam dates of January-February all integrated exam-grades above 23 should be automatically registered and cannot be refused.

Teaching tools

Slides, short videos and case study analysis

Links to further information

http://bit.ly/KfyWWl

Office hours

See the website of Marco Bigelli