5008109: C15 Corporate Governance and Ethics

Description

Ethics Essentials:

• Theory, Principles, and World-Views
• The Ethical Leader: Self-Mastery and Ethics, Mind-Sets
• Corporate Ethics: Shared Values, Professionalism (as part of Standards of Professional Conduct)
• CFA Institute Code of Ethics and Standards of Professional Conduct
• GARP Ethics and Code of Conduct

• Role and Responsibility of Owners
• Practice of Right of Control for Various Actors
• The Problem of Free Riding
• Major Investors
• Conflicts of Interest Between Financiers
• Conflicts of Interest Between Stakeholders
• Financial Remuneration of Managers
• Alternative Designs for Option-Based Remuneration Structures for Managers
• Role and Responsibility of Institutions (Accounting, State)
• Corporate Governance in Financial Services Undertakings
• Optimal Design for Corporate Governance
• Empirical Investigations of Corporate Governance
• The role of Risk Management in Corporate Governance

Learning Outcomes

Ethics:

• Understanding the origins, discipline and business case of ethics
• Discussing defined moments such as ethical dilemma in the corporate context
• Familiarizing with the standards of professionalism in particular

• illustrate the role and responsibility of corporate owners
• explain the right of corporate control
• describe the problem of free riding
• identify the special characteristic of major investors
• describe conflicts of interest
• scrutinise methods of remuneration of managers
• describe and critically evaluate differing designs for option-based remuneration structures regarding their effect
• demonstrate the role and responsibility of the board of directors, a company’s audit committee and the state
• explain the special characteristics of Corporate Governance in the undertakings of financial services
• develop optimal Corporate Governance structures
• contrast empirical investigations of Corporate Governance
• compare and contrast best practices in corporate governance with those of risk management
• evaluate the relationship between a firm’s risk appetite and its business strategy
• distinguish the different mechanisms for transmitting risk governance throughout an organization
• illustrate the interdependence of functional units within a firm as it relates to risk management

Lectures Method

Interactive lecture with discussion, cases.

Literature

Required reading in Ethics:

• Boatright, J.R. (2014). Ethics in Finance, 2nd edition. London: Wiley-Blackwell.
• CFA Standards of Practice Handbook (11th ed.) (effective 1 July 2014) [http://www.cfapubs.org/toc/ccb/2014/2014/4]
• GARP (2010). Code of Conduct, revised edition.

• Brinsley, N. (2006). Executive Stock Options: Early Exercise Provisions and Risk-taking Incentives. The Journal of Finance, 61(5), 2487–2509.
• Crouhy, M., Galai, D., & Mark, R. (2014). The Essentials of Risk Management (2nd ed.). New York: McGraw-Hill. [Chapter 4]
• Dittmann, I. & Maug, E. (2007). Lower Salaries and no Options: The optimal Structure of Executive Pay. The Journal of Finance, 62(1), 303-343.
• Hall, B. J., & Murphy, K.J. (2003). The Trouble With Stock Options. Journal of Economic Perspectives, 17(3), 49-70.
• Hall, B. J., & Murphy, K. J. (2002). Stock options for undiversified executives. Journal of Accounting and Economics, 33(1), 3-42.
• Monks, R.A.G., & Minow, N. (2011). Corporate Governance (5th ed.). Chichester: Wiley.
• Rezaee, Z. (2008). Corporate Governance and Ethics. London: Wiley.

Materials

Lecture slides will be available on Moodle