A Closer Look
at Business Education
Corporate governance (CG) is one of the most talked about topics in business, indeed in society, today.
Google search revealed 513 news citations during a single week in June 2006.
Most academics, business
professionals, and lay observers would agree that CG is defined as the general set of customs, regulations,
habits, and laws that determine to what end a firm should be run.
Much more fraught, however, is the
question: “what defines
It is clear that CG exists at a complex intersection of law, morality, and economic efficiency.
however, is the extent to which current MBA education reflects that complexity.
CG is usually not a
distinct academic discipline, but integrated into other courses.
Considering that issues of executive
compensation, financial scandals, and shareholder activism are all tied up with CG, its teaching is a topic
takes a broad view of the topic, with the goal of addressing the following questions:
What are the key issues in CG, as regards business’ social and environmental impacts and
How do leading thinkers perceive the issue?
What is the current state of practice on MBA campuses?
What teaching resources are available to business school faculty?
A FACULTY POINT OF VIEW:
Michael C. Jensen
is an Emeritus Professor at Harvard Business School.
In 1973 he founded the Journal
of Financial Economics and in 1994 he co-founded the
Dr. Jensen has published
prolifically, received numerous awards, and is widely considered to be a leading scholar in the field of
corporate governance and control.
His papers have been downloaded from SSRN 245,196 times.
On current problems in worldwide corporate governance:
“There will always be a ‘problem’ in the sense that we will never get a perfect solution to governance in
the sense that there will be no defects. The optimal governance system will be one that just balances the
benefits of reducing malfeasance with the added costs of more stringent governance. So there will still be
[two] types of costs being incurred: costs due to malfeasance and costs created by the governance and
control systems themselves.
I do believe we can create governance systems that perform much better in western capitalism than we
currently have. And, let’s be careful to recognize that western capitalism governance systems have proven
themselves to be far superior to any other system we know or have known. A brief look back at the failure
of socialist and communist systems is sufficient to illustrate the point.”
On whether a manager’s end goal should be to maximize shareholder value: