The Williams School of Business Bishop's University. BFN 341: Corporate governance Fall 2009

Transcription

1 The Williams School of Business Bishop's University BFN 341: Corporate governance Fall 2009 Instructor: Calin Valsan Office: Hamilton 206 Phone: /ext Internet: Office hours: TBA Course objectives This course is aimed at those who aspire to higher level managerial positions in the corporate world. It is also addressed to those who desire to pursue graduate studies in the area of Finance and Political Economy. You will learn about the theory of corporate governance and its applications. You will analyze agency costs and assess their impact on firm valuation. The course will take the format of a seminar; student commitment to homework and class participation is absolutely essential to the success of the course. Corporate Governance is a discipline that offers insights into the relationship between economic efficiency and economic organization. After completing this course, you should understand: The differences between free markets and hierarchies The nature and allocation of financial claims The organization and functioning of various corporations around the world The connection between ethics and economic performance Recommended text: There is no text in this course. You will use my classnotes Strongly Recommended: Daily reading of the Globe and Mail Report on Business, Wall Street Journal, or the National Post. Weekly reading of the Business Week or Fortune Magazine. Mark Allocation Mid-Term Exam 30% Case study 1 (presentation) 20% Case study 2 (presentation) 20% Final Exam 30% Total 100% 1

2 Case Study You have to conduct a comprehensive analysis of two publicly listed corporations. By concentrating on the ongoing operations of a publicly listed firm, you will confront the complexity of real-life economic activity. This assignment will also test your resourcefulness, creativity, and ability to analyze a business from an integrative perspective. The case study consists of two sections: 1. Corporate Finance -This brief section will give you a general idea of the operating and financial performance of the firm within the last three years. You must address the following issues: General overview of the firm: its products, history, and organization Financial standing: simplified financial statements and main financial ratios Capital structure and financing policy: type of debt, equity issues, dividend policy Cash flow estimation: Cash flow from assets and cash flows to claimholders 2. Corporate Governance This section will reveal the strengths and weaknesses of the governance arrangement used by the corporation. This will represent the bulk of your presentation. You must address the following issues: The role of shareholders: large blockholders, proxy contests, voting system Board of Directors: size, composition, independence, and functioning The particulars of executive compensation Corporate charter and by-laws The timeliness and quality of disclosure: corporate finance and corporate governance Other issues: merger history, poison pills, etc. Each case study will be presented in class as scheduled. The class presentation will allow me to monitor your progress and provide feedback. At the same time you will also receive valuable feedback and comments from your peers. References: In order to gather data and other information pertaining to your corporation, I suggest the following starting points: Look-up your firm(s) on the TSX and become familiarized with it (them) Search the media for headline news Search SEDAR for financial information, management proxy circulars, etc.: Ask the business librarian for further assistance At any time prior to presentation feel free to contact me for guidance on how to proceed with your analysis The final and mid-term exams are closed book, covering the topics discussed during lectures and presentations. Format: short open-ended questions. 2

3 Course outline (This outline may be subject to changes) Week 1 Introduction Week 2 Ownership and the modern corporation Nature and role of ownership Origins of the corporation The nature of the public corporation Corporate governance defined Week 3 Mechanisms of corporate governance The board of directors Large block-holders Executive compensation Capital structure Corporate charters and by-laws Legislation The market for corporate control The product market Week 4 More on mechanisms of corporate governance Week 5 Mid-term exam Week 6 Thanksgiving Corporate ownership and governance in Canada Week 7 Corporate ownership and governance in Canada Case presentation: General Motors Case presentation: Chrysler Week 8 International corporate governance Case presentation: Nortel Case presentation: RIM Week 9 International corporate governance Case presentation: FIAT Case presentation: Parmalat 3

4 Week 10 International corporate governance Case presentation: VW Case presentation: Sony Week 11 Comparative Corporate Governance The Role of the Legal System Systems of Corporate Finance Case presentation: Hollinger International Case presentation: Google Week 12 Corporate Governance and Economic Performance The Board of directors Large Block-holders Case presentation: Magna International Case presentation: Rona Week 13 Wrap-up and review Final exam as scheduled by the university 4

5 Instructor s grading criteria for case studies, assignments, essays, and presentations Relevance of the treatment to the problem in question Structure Clarity and readability Language and grammar Use of concepts learned in class (when applicable) Complexity/sophistication of analysis and discussion Ability to analyze and integrate Methodology (when applicable) Willingness to learn independently (when applicable) Results vs. available information (when applicable) Handling of questions (when applicable) Quality of ancillaries (Slides, summaries, etc - when applicable) Overall impression. Deadline met? N Y Penalty = 10%/day COMMENTS: 5

6 General approach to evaluating student work Knowledge is an exosomatic evolutionary adaptation helping individuals to cope with uncertainty and change. I am therefore primarily interested in your ability to learn independently and think critically. You should be able to use your newly acquired knowledge to solve unexpected challenges. Student work will be assessed in terms of content and structure, that is, I will focus on relevance, completeness, coherence, logical flow, and overall quality. Around 90% and above What it means: The quality of work greatly exceeds instructor's expectations. The student demonstrates exceptionally high level of intellectual achievement, very high level of research, exceptional quality and structure, resourcefulness, ingenuity, good analytical and writing skills. This level of achievement cannot be prescribed in advance by the instructor, although it can be recognized after the fact. Around 80% What it means: The quality of work somewhat exceeds instructor's expectations. The student demonstrates good, although not excellent, reasoning, writing, and problem-solving skills. Strengths outweigh weaknesses and the quality of work is consistent throughout. Around 70% What it means: The quality of work meets instructor's expectations. The student demonstrates average reasoning, writing, and problem-solving skills The quality of work is above the minimal level of skill but it is inconsistent at times. There are as many weaknesses as strengths. This level of achievement can be easily prescribed by the instructor. Around 60% What it means: The quality of work does not quite meet instructor's expectations; it demonstrates a belowaverage level of understanding, reasoning, writing and problem-solving skills. The work is inconsistent at times; it shows lapses in content and structure. Around 50% What it means: The quality of work falls short of instructor's expectations; it demonstrates a minimal level of understanding, reasoning, writing and problem-solving skills. The work is poorly done and largely inconsistent. It shows serious lapses in content and structure. Below 50% What it means: The quality of work is unacceptable; it demonstrates an inadequate level of understanding, reasoning, writing and problem-solving skills. 6

7 Peer Evaluation Form This form will help me differentiating individual marks in the case of group assignments. The success of this exercise depends on your honesty and responsibility in answering the questionnaire below. Your answers will remain confidential. I will first assign an overall mark for each submitted project, and then I will attempt to differentiate each team member s individual mark based on the feed-back provided through this form. Your name: Case(s) presented and/or submitted: Assign each group member (excluding yourself) a letter grade based on how you perceived his/her performance on this group project. A = excellent contribution B = good contribution C= satisfactory contribution D= minimal contribution F= unsatisfactory contribution Team member(s) Effort and time Quality of cooperation Understanding of topic in question Overall contribution Other comments: 7

8 Note on plagiarism and academic dishonesty 2.1Plagiarism is a kind of academic dishonesty in which an individual uses the work of another without appropriate acknowledgement. Plagiarism includes but is not limited to the following practices: Using another's work without acknowledgement Copying material without quotation marks Paraphrasing too closely the exact words of the originating author Submitting as one's own work written in whole or in part by another individual 2.2 The following practices related to plagiarism are also prohibited: Helping another student plagiarize Submitting in whole or in part work for which the student has received credit in another course, unless the permission of the instructor has been obtained Submitting any statement of fact known to be false or providing a fabricated reference to a source 3. PROCEDURE IN ALLEGED CASES OF ACADEMIC DISHONESTY 3.1The instructor will meet with the student and reach a decision concerning the matter. In the event that a sanction beyond a warning is required, the Dean will be informed. 3.2 In a repeated or particularly serious case, or if the student disputes the decision of the instructor, the Dean will be informed. If necessary, the Dean will meet with the student and the instructor. Another member of the University community may accompany the student. The Dean will make the final decision in the case, including the assignment of a penalty, if any. If the decision is that the student is guilty of academic dishonesty, the Dean will inform the student in writing, and send a copy of the letter to the instructor and to the Registrar. The student may appeal the decision to the Student Academic Appeals Committee. 4.PENALTIES The normal penalty for a first offense is a zero grade in the component of the course in which the dishonesty occurred. However, in a case of particular seriousness, or in the case of a repeated offense, penalties may include a zero grade in the course, suspension for one semester or longer, or expulsion from the university Note on Finance Concentration Stream Courses: 9 courses, 27 credits Required Courses: 2 courses (6 credits) BAC122 Financial Accounting BFN210 Capital Markets Plus any 5 courses (15 credits) of: BFN301 Capital Budgeting BFN315 Financial Derivatives BFN340 Risk Management in Financial Institutions BFN341 Corporate Governance BFN342 Theories of Finance BFN351 Financial Statement Analysis BFN352 Investment Analysis and Portfolio Management BFN354 Seminar in Finance BFN356 SEED Portfolio (6 credits) BFN360 International Finance Plus any 2 elective courses (6 credits), in or outside of Business 8