B0790 - THE LAW AND ECONOMICS OF CORPORATE GOVERNANCE

Learning outcomes

The course introduces the students to the economic principles of financial transactions and financial contracts. In a financial transaction, a buyer and a seller exchange an asset for payment. The course will use the principles of financial economics and corporate finance to teach the students the main characteristics of financial transactions, particularly in the presence of asymmetric information, agency problems, holdouts and transaction costs, and the incentive schemes produced by the main legal remedies and contract clauses typically adopted in financial contracting. At the end of the course, the student will know the main contingencies pertaining to specific types of financial transactions (purchases, loans, mortgages, etc.) will have the ability to map the risks associated to those contingencies, and prioritize them. The student will also be able to apply economic techniques to correct those risks.

Course contents

1. Economic theories of the firm

a) the firm as authority

b) the firm as a nexus of contracts

c) the firm and specific investment

2. Law and finance

3. International perspective: Italy, Germany, UK, USA, Japan

Readings/Bibliography

Oliver Hart: Firms, contracts and financial structure, Ch 1-2. OUP

Material distributed in class

Please check for additional material on Virtuale (link on the right)

Teaching methods

Lectures + students' presentations

Assessment methods

Written test, one hour long. The test will include 7-9 open questions, some of which will require analitical skills (work with models).

The mark of the paper will reflect the cadidate's:

i) knowlege of the subject,

ii) ability to work with formal models/arguments,

iii) use of appropriate terminology.

Students' presentations contribute to the overall mark (max 3 points)

Evaluation grid

1. Basic knowledge of most topics of the course; basic critical and analytical skills; formally correct language and terminology → 18-22;
2. Good knowledge of the topics of the course; good analytical and critical skills; formally correct language and terminology → 23-26;
3. In-depth knowledge of the topics of the course, good analytical and critical skills, proficiency in technical language and terminology → 27-29;
4. Outstanding knowledge of the topics of the course, outstanding analytical and critical skills, proficiency in technical language and terminology → 30-30L.

Office hours

See the website of Luigi Alberto Franzoni