Corporate Governance

This syllabus is only as an informative orientation for new students.
Every academic year, professors will give to the students the updated syllabus with the exact contents and evaluation system.

 

Bartomeu Pascual (UIB)
tomeu.pascual@uib.es

Rafel Crespí (UIB)
rafel.crespi@uib.es

 

Part 1. Capital Structure (Professor Bartomeu Pascual Fuster)

1. Capital Structure: Modigliani-Miller theorems

  • Introduction
  • The Irrelevance Conditions
  • The Effect of Corporate Taxes
  • The Effect of Corporate Taxes with Personal Taxes
  • Taxes Dividends and Share Repurchases

2. Bankruptcy Costs and Debt Holder – Equity Holder Conflicts

  • Introduction
  • The debt overhang problem (underinvestment)
  • The asset substitution problem
  • The shortsighted investment problem
  • The reluctance to liquidate problem
  • How can firms minimize the problems?

3. Capital Structure and Corporate Strategy

  • Stakeholder Theory and Capital Structure
  • Capital Structure and Competitive Strategy
  • Dynamic Capital Structure Considerations

 

Reference Manual of par 1; “Financial Markets and Corporate Strategy” Hillier,

Grinblatt, M. and Titman, S. McGraw-Hill Irwin. 2nd ed. Chapters 14-17.

 

 

Part 2. Ownership and corporate practices (Professor Rafel Crespí Cladera)

  1. Ownership, control and performance
  • Separation of ownership and control
  • Governance and Performance
  • The market for corporate control

2. Corporate governance practices

  • Executive compensation
  • The roles of the board: monitoring and advice
  • Board structure and independence

3. Regulation and best practice codes

  • One size fits all?
  • The governance of family firms
  • The governance of Banks

 

 

Basic readings

Davies, J.R., David Hillier and P. Mc-Colgan (2005) “Ownership Structure, Managerial Behavior and Corporate Value”, Journal of Corporate Finance, 11, n.º 4, pp. 80-96

Jensen, M. and Meckling, W. (1976), “Theory of firm: managerial behavior, agency costs and ownership structure”, Journal of Financial Economics, 3, pp. 305-360.

Thomsen, S. and T. Pedersen, 2000, “Ownership Structure and Economic Performance in the Largest European Companies”, Strategic management Journal, vol. 21, 689-705

Demsetz, Harold, Belen Villalonga (2001) “Ownership Structure and Corporate Performance” Journal of Corporate Finance, Vol. 7, pp. 209-233, 2001

Bebchuk, L.A., Fried, J., and Walker, D.I. (2002), ‘Managerial Power and Rent Extraction in the Design of Executive Compensation’, University of Chicago Law Review, Vol. 69, pp. 751-846. Burkart, Mike, Andrei Shleifer, and Fausto Panunzi, 2003, Family firms, Journal of Finance 58, pp.2167-2202.

Regulation of UK Corporate Governance: lessons from accounting, audit and financial services. By: Dewing, Ian P.; Russell, Peter o.. Corporate Governance: An International Review, Jan 2004, Vol. 12 Issue 1, p107-115

Cestona, M.A. and J. Surroca (2008): Multiple goals and ownership structure: Effects on the performance of Spanish savings banks. European Journal of Operational Research 187 (2008)

 

Evaluation

The final grade of this course will be computed as follows;

  • 10% with active participation in class. It will be valued whether the student contributes asking and answering relevant questions, and discussing the contents of the lectures in the classroom.
  • 20% resolving exercises and take home practices provided by instructors as assignments
  • 70% exam