FEM 488ETop. FEM: Corporate Governance

This course will teach the fundamental theories and practice of corporate governance. This course covers the history of the corporation, boards of directors, the division of profit sharing and various forms of employee ownership and equity ownership among insiders, regulation, shareholder activism, the impact of takeovers and mergers and acquisitions on governance, ethical issues such as conflicts of interest and insider trading, international corporate governance, and policy developments likely to impact the corporation. Corporate governance refers to the mechanisms that solve two principal-agent (PA) problems, which are present in large corporations where ownership of residual cash flow and control are in different hands. One such PA problem arises between the owners of capital and managers, and another between the small, dispersed owners and large, concentrated blockholders of the firm. The objective of the course is to present the main questions and answers related to corporate governance, the theories describing them and the empirical work.