Ethics and Corporate Governance

Course manual

Ethics and Corporate Governance (BKM13FI)

1. Course description

This 2 ECTS course deals with ethics and corporate governance. The course starts with corporate governance, i.e. the management and control of corporations. We then go on to discuss the connection between corporate governance and ethics. We look at two issues more specifically. First, we look at reasons for unethical behaviour and the individual organization members that make up the firm and will address questions of behavioural ethics. Secondly we will look at ways to control ethical behaviour within organizations.

Teachers: Prof. dr. Peter Roosenboom, drs. Martijn de Kiewit (KPMG)

Office: T9-56

Phone: 010-4081255, 020-6568587

Email: proosenboom@rsm.nl, dekiewit.martijn@kpmg.nl

Office hours: Please make appointment via email.

2. The lectures

This course consists of six lectures. Lectures will be held on Monday (1 lecture), and Thursdays (5 lectures). See schedule in section 5. During these lectures, we will discuss journal articles. These journal articles are available on Blackboard in the folder Course documents/literature (course material). We post the links to articles and not pdf documents on Blackboard given copyright issues (note you need to be logged into the university network in order for the links to work). For the same reason, there is NO reader for this course given the high costs involved (you would need to pay a substantial fee for author’s rights in addition to copying costs). We therefore recommend you to print or copy the articles yourself.

2.1. Overview of the lectures

Lecture 1 (Week 44): Agency theory (Roosenboom)

Jensen and Meckling (1976) developed a theory where the principals (owners, shareholders) hire an agent (manager) to manage the company for them. This creates a potential agency conflict since the managers might pursue their own interests at the expense of the shareholders. In this class, we will introduce agency theory and discuss the empirical literature that tests this theory. In particular, we will discuss how managerial incentives affect financial decisions and firm performance. We discuss (parts of) Shleifer and Vishny (1997) and Dennis and McConnell (2003). Before lecture I will post discussion slides that contain empty boxes. You