87512 - THE ECONOMICS OF FINANCIAL TRANSACTIONS

Conoscenze e abilità da conseguire

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.

Contenuti

Course timetable

Lesson period February 19th, 2019 - March 26th, 2019

1. Tue. February 19th, 2018

09:00 - 12:00

Introduction – Overview:

• Law and economics of corporations
• Shareholders vs Debtholders vs Agents conflicts
• Market for Corporate Control
• Financial markets structures
• The role of information within financial markets
• Law and Economics of Banking institutions
• Other financial markets actors

 

2. Thu. February 21st, 2019

09:00 - 12:00

The Law and Economics of Listed Corporations:

• The role of Shareholders
• The role of directors and the agency problem
• The role of officers and the duties of care and loyalty

 

3. Mon. February 25th, 2019

13:00 - 16:00

The Law and Economics of Listed Corporations /2:

• Majority vs Minority Shareholders conflict
  
• Voting and voice rights
  

 

4. Tue. March 4th, 2019

13:00 – 16:00

The Law and Economics of Listed Corporations /3:

• Empty voting and morphable ownership
• Hedging devices

 

5. Mon. March 8th, 2019

13:00 - 16:00

The Law and Economics of Listed Corporations /4:

 

• Shareholders vs. debtholders conflict
• The asset substitution problem
• Covenants and trigger clauses

 

6. Tue. March 18th, 2019

13:00 - 16:00

Corporate Investments Devices:

• The role of debt instruments within financial markets
• Stocks and the role of the various shares of capital
• Other forms of common investments

 

7. Mon. March 19th, 2019

13:00 - 16:00

The role of Information in Financial Markets:

• Mandatory Disclosure
• The nature and the role of Information Intermediaries
• Auditors and other Information intermediaries
• Credit Rating Agencies as specialized infomediaries
• Insider Trading and market manipulation

 

8. Tue. March 21st, 2019

13:00 - 16:00

Banking Corporations:

• the structure and the role of banking institutions within EU market
• The Corporate Governance of Banks

 

9. Thu. March 26th, 2019

13:00 - 16:00

Banking Corporations /2:

• Banks as payment providers
• Banks and the payment system regulation

 

10. Tue. March 29th, 2019

9:00 - 12:00

Other Financial Players:

• Hedge funds
• Dark pools of liquidity

Testi/Bibliografia

Readings:

Corporations:

• Klein, Coffee, Partnoy, Business Organization and Finance, Foundation Press, 2010, p. 106-139; p. 156-189; p. 207-221.
• Hu - Black, Hedge Funds, Insiders, and the Decoupling of Economic and Voting Ownership: Empty Voting and Hidden (Morphable) Ownership, in Journal of Corporate Finance, 2007, vol. 13, pp. 343-367; Available at SSRN: https://ssrn.com/abstract=874098

  Corporate investments:

• Klein, Coffee, Partnoy, Business Organization and Finance, Foundation Press, 2010. p. 242-313; p. 402-422.

  Information in Financial Markets:

• Easterbrook - Fischel, The economic structure of corporate law, Harvard University Press, p. 276-314.
• Coffee, Ratings Reform: The Good, The Bad, and The Ugly, in Harvard Business Law Review, 2011, 1, p. 231-278.
• Armour, Awrey, Davies, Enriques, Gordon, Mayer, and Payne, Principles of Financial Regulation, Oxford University Press, 2016, chapter 6; sections 9.2, 9.3, 9.4.

  Banking corporations:

• Armour, Awrey, Davies, Enriques, Gordon, Mayer, and Payne, Principles of Financial Regulation, Oxford University Press, 2016, p. 275-288 and 370-409.

  Other financial players:

• Ferran, After the Crisis: The Regulation of Hedge Funds and Private Equity in the EU, in European Business Organization Law Review, September 2011, Volume 12, Issue 3, pp 379–414
• Petrescu - Wedow, Dark Pools in European Equity Markets: Emergence, Competition and Implications (July 11, 2017), ECB Occasional Paper No. 193. Available at SSRN: https://ssrn.com/abstract=3008485

Additional suggested reading – including the relevant regulations - will be featured within each lecture.

Metodi didattici

Traditional lecture using Powerpoint/PDF presentations.

The lectures will be held in English.

The proactive participation of the students is warmly welcomed.

Modalità di verifica e valutazione dell'apprendimento

The final exam will consist in writing and presenting an essay/short paper on a specific topic assigned to groups of 2/3 students.

Strumenti a supporto della didattica

Presentations either in Powerpoint or PDF format.

Orario di ricevimento

Consulta il sito web di Federico Parmeggiani