Career Development and Lifestyle Planning
Corporate Governance2 CreditsBU.231.720.XX [NOTE: Each section must have a separate syllabus.][Day & Time / ex: Monday, 6pm-9pm][Start & End Date / ex: 3/24/15-5/12/15][Semester / ex: Fall 2016][Location / ex: Washington, DC]Instructor[Full Name]Contact Information[Phone Number, (###) ###-####][Email Address]Office Hours[Day(s)/Times]Required Texts & Learning MaterialsCorporate Governance (5th Ed. ISBN 978-0-470-97259-5), Robert A.G. Monks and Nell Minow, Wiley-Blackwell, 2011.Lecture notes on Corporate Governance by Dr. Yener (DY).Other cases and readings to be distributed through Blackboard as required.(Please note: the latest edition of the textbook will be adopted if there is one available. Please check out our online bookstore for most updated textbook information ). Please see other required and recommended readings in the class schedule. Course DescriptionThe value of a firm depends on corporate governance practices that protect the investor. Greater investor protection lowers the cost of capital. Thus, the set of governance practices, rules and regulations that promote private sector development also promote firm value. Topics include corporate pyramidal structures, hostile takeovers and the failure of the market for corporate control, mutual fund governance, executive compensation policies, boardroom structure and practices, corporate transparency and the value of the shareholder vote. Students cannot earn credit towards a degree or certificate for both 231.720 and 800.610 – these are equivalent course numbers.Prerequisite(s)While there is no pre-requisite for this course, some background in Economics, Accounting, Corporate Finance and Investments is recommended.Course OverviewMuch of the productive capacity of the global economy is owned by business enterprises in the form of corporations. One of the key aspects of the corporation is the separation between ownership and control, which is the foundation of the Agency theory. While such separation allows corporations to exist independent of the life of owners and to attract professional expertise, it creates an agency problem in which agents may act in their own interests at the cost of owners. Due to the imperfect contracts and information asymmetry, various corporate governance mechanisms exist and keep evolving. The corporate governance issues have attracted every more public attention because of a series of corporate events and scandals (e.g. Swissair, Enron, WorldCom, UBS, etc.). As a result of the recent financial crises and corporate scandals, a number of global institutions worked together to issue standards and principles that will provide guidance for a number of business and trade related activities, including corporate governance. OECD introduced the principles of corporate governance in 1999, and revised it in 2004. This has become standard corporate governance guidance to many international applications. The Sarbanes-Oxley Act of 2002, and the Dodd-Frank Act of 2010 in the US have provided the much needed legislation for the US-based corporations, and it had reverberations in the global arena. Corporate governance has become an increasingly important topic among shareholders, other corporate stakeholders and government regulatory agencies on how firms are being governed and the effectiveness of corporate governance. The course addresses this broad issue. Finally, the course places a good deal of emphasis into building a business case for good corporate governance practice rather than looking at it as simply a compliance to law issue. For this, we focus on the four values of corporate governance: Transparency, accountability, responsibility, and fair and equitable treatment of all shareholders as the mantra for this course.Learning ObjectivesBy the end of this course, students will be able to: Develop an understanding of the form of corporation and of the corporate governance framework. Understand the global best practice knowledge in corporate governance and the proper environment necessary to perform the duties of the board.Understand the causes of agency problems; grasp the role and responsibilities of the shareholders, the board of directors and the executive management and other stakeholders in governance.Get a fairly good idea of the BIS and OECD principles of corporate governance, and legal and regulatory framework on corporate governance based on Sarbanes-Oxley (SOX) of 2002 and Dodd-Frank (2010).Understand why transparency, responsibility, accountability and fair and equitable treatment of all shareholders are the four main pillars of good corporate governance.Study the relationship between corporate governance and financial security design and access to finance.Understand and examine various monitoring mechanisms (board of directors, separation of CEO and Chairman roles, executive compensation, takeover, controlling shareholders, creditor controls). Understand how the board will protect the rights of the shareholders by transparency, effective disclosure, internal and external audit, committees, responsibility, and accountability.Develop an understanding of good corporate governance practices and their global implications.Learn about corporate governance assessment and rating for investment purposes.To view the complete list of Carey Business School’s general learning goals and objectives, visit the Teaching & Learning@Carey website. Assignments AssignmentCourse Learning Objective(s)WeightAttendance and participation in class discussionsPlease see 1-9 above15%2 Quizzes (Due dates: Week 3 and Week 5)Please see 1-9 above30%CG Assessment and Rating Paper and Presentation/Submission (Week 7)Please see 1-9 above15%Final Exam (Comprehensive) (Week 8)Please see 1-9 above40%Total100%Attendance and Class Participation (15%)Attendance and participation are an important part of your course grade. Students are expected to attend all scheduled class sessions. Each class will include opportunities for teams to work together. Failure to attend class will result in an inability to achieve the objectives of the course. Full attendance and active participation are required for you to succeed in this course. If you anticipate that you will miss two or more lectures due to business reasons or other, I strongly recommend you consider dropping this class and find another time to take it. Students will benefit most on the topics covered in this course through actively participating in classroom interaction. Attendance and classroom participation will account for 15% of the course grade. Active participation and contribution to insightful discussions will receive higher grade in classroom participation. Two Quizzes (30%)There will be two quizzes through the period, each accounting for 15% of the final grade. Each quiz will cover the contents delivered in previous lectures and will take 20 minutes. The quiz format may consist of True/False problems, multiple choice, and/or short essay problems. Students who have to miss the scheduled quiz should contact the instructor. Quiz make-ups are not possible. Students should try not miss a quiz as it will affect the final grade.Corporate Governance Assessment Project and Presentation (15%)The instructor will distribute a corporate governance rating survey instrument (CG Rating Survey) to all students at the beginning of the session. The survey instrument was prepared by the instructor for the purpose of corporate governance rating of listed companies and it is currently in use in a number of locations.Each student will be assigned (by the instructor) one publicly traded company (preferably an S&P 500 firm) at the beginning of the session. This is the company the student will analyze and assess the corporate governance compliance and identify any weaknesses.How to accomplish this project:The project is an individual project. Students may form teams of a maximum of 4 students. Working in teams should facilitate your understanding. Teams hold meetings with the instructor as required to clarify any issues. The final project will be submitted via Blackboard by each individual student.The goal of this assignment is to conduct the corporate governance assessment of a listed company based on the OECD principles of corporate governance. The learning objective of this exercise is to understand how the CG Principles are operationalized. As a result of the exercise, students will write a corporate governance assessment paper and provide recommendations. Papers will be individual. This paper is worth 15 points towards the final grade.Details of the deliverable (The Paper) follows: The Report: (15 points) The corporate governance rating and assessment paper may be structured as the following:At the beginning of the term, you will be assigned a company from the S&P 500 list. Conduct research on recent corporate governance related articles about the S&P 500 company you are assigned. These resources may include the corporate web site, the US SEC EDGAR web site, the NYSE, or the Wall Street Journal or other business periodicals (FT, Fortune, Forbes, Bloomberg, CNBC, etc.).The Executive Summary/Introduction: (1-2 pages) Using the data you have collected from the company website and other publicly available information, prepare the executive summary that should clearly state the objectives, background and the main findings of your corporate governance assessment paper on the selected company. (2 points)The Company Background (1 page): Prepare a brief, one page maximum review of the company background, important issues reported in its US SEC filings, and other information you have collected. You may provide the following information in an attached exhibit, with proper references provided (2 points)The company organization, its values, vision, mission, products (keep it very short); Corporate financial information, revenues, capitalization, stock price, ROE, ROI, PE ratio, Book/Market ratio, its management team and corporate governance practices. Using a table in the appendix, discuss some of the highlights. (prepare a short table of information and attach it to the end in an appendix);The CG Survey Results: (2-3 pages) Using the 100-question CG survey instrument you will be provided by the instructor, determine your survey findings and calculate the CG score. Using the guidance in the provided survey instrument, rank this company (from 1-5) based on your survey score. A suggested structure is (4 points):Summarize findings of the survey. You may provide charts as exhibits at the end to provide this information. Explain why some of the survey questions may or may not be applicable, if there are any.Next, discuss your CG Scoring finding. Provide the table from the survey Excel spread sheet results. iv. Next, discuss specifically the corporate governance Strengths, Weaknesses, Opportunities and Threats (SWOT), and how some of the observations you have made relate to pertinent topics covered in the course.v. Do not copy the data as found in the corporate web site. For any such information, paraphrase and write it in your own words. If you use any corporate web site information, or other sources, then show references. Findings and conclusions: (2-3 pages) Using the findings and the results of your survey, discuss the available corporate governance mechanisms that are relevant to the chosen firm and the advantages and disadvantages of those mechanisms. While discussing your findings, try to bring in academic literature and/or provide practical evidence to support your argument. Expand the discussion on the theory (ies) behind the main CG issues that are identified. The conclusions (1-2 pages) should summarize the main findings and discuss their implications for the particular firm, investors, regulators and the economy. (4 points)Attachments: Include references, charts figures and/or tables to support your report. (3 points)The Final Paper: Altogether your paper written in MEMO style should not exceed maximum of 6-8 pages, excluding appendices. No limit on the number of appendices you provide. Presentation: Each student will discuss a very brief summary of their papers on the 7th lecture period. Each student will have a maximum of 5 minutes to present the findings and lessons learned. There will be some time for Q&A and comments session. The instructor will grade the quality of the presentation and delivery of the message. Presentation is considered as “Class Participation” and will be graded accordingly. (2 points)Instructor will require students to turn in their CG score and some other data for their company in an Excel spreadsheet. The instructor will collect this data, and prepare a summary of the class findings of the ratings for discussion in class on Week 7.Instructor may decide to make adjustments to the presentation schedule depending on class size and time limitations.The final written report is due two to three days following the class discussion on Week 7. Students will be given further instructions on first day of class. The final company CG scoring and assessment report must be submitted via Blackboard.Final Exam (40%)The final will be a 3-hour, in-class, comprehensive, closed-book exam on the eighth session. GradingThe grade of A is reserved for those who demonstrate extraordinarily excellent performance. The grade of A- is awarded only for excellent performance. The grade for good performance in this course is a B+/B. The grades of D+, D, and D- are not awarded at the graduate level. Please refer to the Carey Business School’s Student Handbook for grade appeal information. Tentative Course Calendar* *The instructors reserves the right to alter course content and/or adjust the pace to accommodate class progress. Students are responsible for keeping up with all adjustments to the course calendar.Text: Monks and Minow (M&M). Corporate Governance. 5th Ed. 2011WeekContentReadingDate1Lecture 1: An Introduction to Corporate Governance: The Corporation, Strategy Formation and Value Creation.M&M. Chapter 1: What is Corporation? Principal Agent Theory.DY Lecture 1: Introduction to Corporate Governance. Agency TheoryReading: (1) Jensen and Meckling (1976). “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” (2) Fama and Jensen (1983) Separation of Ownership and Control.Case: See class notes Date Specified2Lecture 2: Ownership and Shareholders.M&M. Chapter 2: The role of Shareholders and OwnershipDY Lecture 2: Shareholders and Shareholder ActivismReading: M&M Ch 2 and DY Class NotesCase: See class notesDate Specified3Quiz #1Lecture 3: The Board Of DirectorsM&M. Chapter 3: The role of Directors and Monitoring DY Lecture 3: The Board of DirectorsReading: M&M Ch 3 and DY Class NotesCase: See class notesDate Specified4Lecture 4: The Management and CompensationM&M. Chapter 4: The role of Management: Agent–Principal Issues.DY Lecture 4: Executive Management and CEO Compensation Issues. Succession PlanningReading: M&M Ch 4 and DY lecture notes.Case: See class notesDate Specified5Quiz #2Lecture 5: Transparency, Disclosure, and Communication. M&M: N/ADY Lecture 5: Transparency, Disclosure, and Firm Value Implications. M&A and the Role of Financial InstitutionsReading: DY Lecture notes.Case: See class notesDate Specified6Lecture 6: Corporate Social ResponsibilityDY Lecture 6: Corporate Social Responsibility. Stakeholders.Reading: DY Lecture notes and otherCase: See class notesDate Specified7Project Presentation. Reports are due today.Lecture 7: The International Environment for Corporate GovernanceM&M. Chapter 7: International Corporate Governance. OECD and BIS Principles. Implementation. Pitfalls. DY Lecture 6: The International Environment for CGReading: M&M Ch 7 and DY Lecture notesCase: See class notesDate Specified8No lecture. 3-hour Final ExamDate SpecifiedCourse SummaryPart I: An Introduction to the Role of the Board and Corporate Governance:Lecture 1: An Introduction to Corporate Governance: Strategy Formation and Value Creation and the External Legal and Regulatory EnvironmentPurpose: To explain the concept of corporate governance and to discuss the legal and regulatory frameworks for corporate governance and their relevanceTopics to be covered: Forms of Business Ownership; Separation of Ownership and Control: Principal-Agent Dilemma; History, Definition, Concept, and Principles of Corporate Governance; Strategy formulation and vision mission concepts; Benefits of Good Corporate Governance; Systems of Corporate Governance. The Theoretical Framework and Worldwide Developments; The International Corporate Governance Framework; The US (Sarbanes-Oxley and Dodd-Frank) and International Corporate Governance Framework; Global and Local Agencies that Provide Leadership and Guidance in Corporate GovernancePart II: Practical Tools for Monitoring, Strategic Guidance and Managerial Oversight:Lecture 2: Ownership and the Role of ShareholdersPurpose: To explain the role of shareholders as owners, the concept of shareholder activism and its effects on corporate governance Topics to be covered: The International Perspective on ownership and rights and responsibilities of share ownership; Shareholder Representatives: Non-Executive and Independent Directors; What Is Shareholder Activism? Activism by Individual, Large, and Institutional Shareholders; Potential Roadblocks to Effective Shareholder Activism. Lecture 3: The Role of Board of Directors Purpose: To provide an overview of the board’s purpose, role and authority Topics to be covered: When to Create a Board; Why Boards Are So Important; Understanding the Difference Between the Board and Management; Board Size, Composition, and Evaluation; The Role and Authority of the BoardLecture 4: The Executive Management and CompensationPurpose: To familiarize the students on the nuances between the role of the board in strategy formulation and providing oversight to the management in the formation and implementation of strategy and the realization of the corporate mission, goals and ics to be covered: The role of the board in management; The Agency problem; Strategy formation; Competitiveness; Board relationships; Role of the board in determining CEO compensation; Leadership; Directors’ knowledge of the businessPart III: The Role of the Board in Transparency and Disclosure:Lecture 5: Disclosure, Transparency and Communication Purpose: To explain the tools of disclosure that ensure transparency of companies. Transparency and timely disclosure is a duty of the board for shareholder protection. It requires timely and accurate disclosure on all material matters regarding the corporation Topics to be covered: Reading and understanding the financial statements of a company; Defining Disclosure and Transparency; Effective Tools for Disclosure; Information Flows and Clear Communication Channels; Understand the significance of accounting and auditing for governance; Appreciate importance of timely and accurate disclosure; How much disclosure is adequate disclosure?; Role of the board in SH protection through disclosure.Part IV: Special Topics:Lecture 6: Corporate Social ResponsibilityPurpose: To explain the concept of corporate social responsibility Topics to be covered: A Changing World for Companies: Demanding stakeholders; The Stakeholder View of the Firm; The Concept of Corporate Social Responsibility; International Aspects of Corporate Social Responsibility; The Criticism of Corporate Social Responsibility.Lecture 7: International Corporate Governance EnvironmentPurpose: To discuss the international corporate governance environment and global best practicesTopics to be covered: Implementing the OECD Corporate governance standards in European Union countries and emerging countries. Corruption and impact on cost of capital. Access to finance. Regulations and agency costs. Does self-regulation work?Carey Business School Policies and General InformationBlackboard SiteA Blackboard course site is set up for this course. Each student is expected to check the site throughout the semester as Blackboard will be the primary venue for outside classroom communications between the instructors and the students. Students can access the course site at . Support for Blackboard is available at 1-866-669-6138.Course EvaluationAs a research and learning community, the Carey Business School is committed to continuous improvement. The faculty strongly encourages students to provide complete and honest feedback for this course. Please take this activity seriously; we depend on your feedback to help us improve. Information on how to complete the evaluation will be provided toward the end of the course.Disability ServicesJohns Hopkins University and the Carey Business School are committed to making all academic programs, support services, and facilities accessible. To determine eligibility for accommodations, please contact the Disability Services Office at time of admission and allow at least four weeks prior to the beginning of the first class meeting. Students should contact Priscilla Mint in the Disability Services Office by phone at 410-234-9243, by fax at 443-529-1552, or by email. Honor Code/Code of ConductAll students are expected to view the Carey Business School Honor Code/Code of Conduct tutorial and submit their pledge online.?Students who fail to complete and submit the pledge will have a registrar’s hold on their account. Please contact the student services office via email if you have any questions.Students are not allowed to use any electronic devices during in-class tests. Calculators will be provided if the instructor requires them for test taking. Students must seek permission from the instructor to leave the classroom during an in-class test. Test scripts must not be removed from the classroom during the test.Other Important Academic Policies and ServicesStudents are strongly encouraged to consult the Carey Business School’s Student Handbook and Academic Catalog and Student Resources for information regarding the following items:Statement of Diversity and InclusionStudent Success CenterInclement Weather PolicyCopyright StatementUnless explicitly allowed by the instructor, course materials, class discussions, and examinations are created for and expected to be used by class participants only.?The recording and rebroadcasting of such material, by any means, is forbidden. Violations are subject to sanctions under the Honor Code. ................
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