This part of the course introduces the key concepts of corporate governance, presents various institutional arrangements of governance in market economies, and discusses their impact on corporate performance. It focuses on internal governance mechanisms as shaped by legal regulations, structure of corporate ownership, and societal understanding of the owners' rights and responsibilities. The second part of the course will focus on capital structure and external governance mechanisms, in particular financial markets.
FEB. 21 MARKET ENVIRONMENT AND PRIVATE PROPERTY
Private ownership and market economy, forms of private property and ownership rights; meaning and constitution of public corporations; separation of ownership and control.
Fama, Eugene F.. and Jensen, Michael C. "Separation of Ownership and Control." Journal of Law and Economics 26 (June 1983): 301-325
Hart, Oliver "An Economist's Perspective on The Theory of the Firm." Columbia Law Review 89 (1989) 1757-1774
FEB.23 CORPORATE GOVERNANCE IN MARKET ECONOMIES.
Ownership and control: interests and incentives; internal and external controls of corporate performance, control through representation and internal control devices.
Coffee, John C. "Shareholders, Versus Managers: The Strain in the Corporate Web," in Coffee, John C., Lowernstein, Louis, and Rose-Ackerman, Susan, eds. "Knights, Raiders, and Targets: The Impact of the Hostile Takeover." Oxford University Press (1988)
Jensen, Michael C. "Eclipse of the Public Corporation." Harvard Business Review 67 (September-October 1989): 61-75
"A New Compact for Owners and Directors." Harvard Business Review 69 (July-August 1991): 141-143
FEB. 28 CORPORATE GOVERNANCE. INTERNAL CONTROLS
Structure of corporate ownership and effectiveness of control; functions and responsibilities of corporate boards; institutional investors and shareholder representation; insider and outsider systems.
Prowse, Stephen. "Corporate Governance in International Perspective: A Survey of Corporate Control Mechanisms in the U.S., U.K., Japan and Germany." Mimeo (1994)
Roe, Mark J. "Some Differences in Corporate Structure in Germany, Japan and the United Sates." Yale Law Journal 102 (1983): 1927-2037
"The Fight for Good Governance." Harvand Business Review 71 (January-February 1993):76-83
Mar. 2 CORPORATE GOVERNANCE: EXTERNAL CONTROLS
Voice or exit: alternatives to control through representation; product markets, capital markets and corporate performance.
Jensen, Michael C. "The Modern Industrial Revolution, Exit and the Failure of Internal Control Systems." Journal of Finance 48 (July 1933): 831-880
Marsh, Paul. "Market Assessment of Company Performance," in Dimsdale, Nicholas and Prevezer, Martha, eds. Capital Markets and Corporate Governance. Oxford University Press (1994): 64-68
FEB.22 and MAR.1
CORPORATE GOVERNANCE IN TRANSITION ECONOMIES
[Discussions] Privatization and governance, legal framework of governance and enforcement infrastructure; ownership structure and corporate accountability; role of banks, institutional investors, and the state; conflicts of interest and standards of conduct.
Phelps, Edmund S., Frydman, Roman, Rapaczynski. Andrzej and Shleifer, Andrei. "Needed Mechanisms of Corporate Governance in Eastern Europe." EBRD Working Paper 1 (March 1993)
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