week1 - Corporate Governance Course Introduction Thomas Noe...

Info icon This preview shows pages 1–17. Sign up to view the full content.

View Full Document Right Arrow Icon
Corporate Governance Thomas Noe Course Introduction
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
The circles of governance law/culture accounting system creditors/ shareholders board CEO comp
Image of page 2
The circles of governance Law: Legal system and culture (e.g., common law vs. civil law) Accounting System Activism by outside owners Creditors (bankruptcy, debt restructuring) Outside equity (takeover, relationship investors) The Board: compensation, replacement ….
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Perspectives for viewing the circles Transactions costs Neo-classical economic theory Principle-agent theory Incomplete contracting Governance
Image of page 4
Questions Does governance affect value? If it does, which aspects of governance are most important? Can financiers profit from trading on or intervening in the governance process?
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Approach Peel back the circles of governance Starting at the macro level of legal institutions and ending at the micro level of CEO compensation and replacement
Image of page 6
Instructional Material Lectures ---develop the basic concepts and outline theories. Clinical Studies ---analyzing a specific governance issues affecting a single firm Empirical Studies ---large-scale studies of a given issue in governance. Provide validation for theory In Class Simulations ---experiments simulating the incentive conflicts faced in governance conflicts.
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Learning experience Breath course as opposed to depth Most issues current Significant reading requirement Large number of disparate and conflicting points of view
Image of page 8
Organizational Structure Thomas Noe
Image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Organizational Structure Thomas Noe
Image of page 10
Lecture Objectives Students should Understand how the organization of corporate activities can affect value
Image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
How institutions affect value: Economies of scale/ Economies of scope Neoclassical economic theory Optimal contract design Principal- agent theory Incomplete contracts Property-rights theory Minimize transaction cost of economc activity Transaction Costs How do institutions affect value?
Image of page 12
Transactions Costs Example: choose corprate form to minimize legal/tax costs investors taxman investors taxman Organizational forms
Image of page 13

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Taxes/transaction costs Tax/transaction cost approach Important insight ---taxes must be considered in designing organizational form. Important limitation ---can only completely explain a small range institutional designs Examples of Tax Motivated Organizational Features: ``Stapled’’ and paper-clip REITs, MLP in the energy industry.
Image of page 14
Neo-classical theory Neo-classical theory-- Firm as a collection of production plans Manager presides over production set Manager acts to maximize wealth of owners by maximizing the market value of the firm. Maximizing flow of relevant information to decision makers facilitates optimization Example: Explains why the foreman at the factory reports to the plant manager and not to the public relations department?
Image of page 15

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Neoclassical theory Neoclassical theory (cont.) Insights from neo-classical theory Production technology is important
Image of page 16
Image of page 17
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern