34546 - International Corporate Governance

Learning outcomes

At the end of the course, the students can compare the main international models of corporate governance and their specific problems. They can also confront 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).

Readings/Bibliography

• 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.

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

• 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 Economics69, 5-50.
  

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.
  
• OPT4: EU Takeover directive~

Teaching methods

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

Assessment methods

The evaluation of attending students will we made by a final written exam made of 20 multiple choices (20/30) and 5 short exercises of 2 point each for a total of 30/30 (plus 3 extra multiple choices for the laude in case of 30/30 on the previous exam part).

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

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

An exercise book for the exam can be found at the following URL:http://amzn.to/1jw5rDq

Re-take exams will have a different format. It will be made of three open questions to be answered in a written form within one hours and for which students are invited to study also the extra material indicated as “OPT-REQ”. When the exam will have this format, the valuation mark will derive from the following valuation scheme:

18-23: sufficient knowledge, though limited to a given number of topics. Overall correct language exposition;

24-27: general good preparation, though with some limits in some topics; good exposition made with a correct technical language;

28-30: Optimal knowledge of the required topics, good analysis and great exposition made with a correct technical language;

30L: Excellent knowledge of the required topics, excellent analysis and textual exposition made with a perfect technical language.

Office hours

See the website of Marco Bigelli