International Corporate Governance

Prof. Ruth Aguilera

Spring 2010

UNDER CONSTRUCTION!!!

Announcements

ICG2010 -- Syllabus

Please fill this sheet out before coming to the first class: background

Session 1. INTRODUCTION TO CORPORATE GOVERNANCE

Required Readings:

• Fiss (2008) Institutions and Corporate Governance

• Shleifer, Andrei and Robert Vishny (1997), “A survey of corporate governance”, Journal of Finance, 52: 737-783

• Global Corporate Governance  (Financial Times 2005, Aguilera & Yip),  READ pp. 4-5

• Zingales, L. 1998. “Corporate Governance”  Pp. 497-503 in The New Palgrave Dictionary of Economics and the Law.

Media:

• Bear Sterns End (May 2008): http://online.wsj.com/article/SB121184521826521301.html

• Lehman Brothers, A Year Later, NYT (Sept. 12, 2009): http://www.nytimes.com/2009/09/12/business/12change.html?ref=business

• Lehman Brothers Had to Die, NYT (Sept. 11, 2009):   

  • http://www.nytimes.com/2009/09/12/business/12nocera.html?pagewanted=2&_r=1&sq=lehman%20brothers&st=cse&scp=2

Additional Optional Readings:

• Aguilera (2004) Corporate Governance

• Davis (2005) "New Directions of Corporate Governance." Annual Review of Sociology

• Yoshikawa, Toru; Rasheed, Abdul A. (2009) Convergence of Corporate Governance: Critical Review and Future Directions. Corporate Governance: An International Review.

• O'Sullivan, M. (2003) "The Political Economy of Comparative Corporate Governance." Review of International Political Economy.

 Download the class slides, here

Session 2. COMPARATIVE CG: OWNERSHIP STRUCTURES

CASE1:  Larker and Tayan, (2008)“Models of Corporate Governance: Who's the Fairest of them all?” Stanford Business School Case, 2008, CG11.

Readings:

• Morck & Steier (2005) "The Global History of Corporate Governance: An Introduction"

• Aguilera and Jackson (2003) Comparative Corporate Governance Academy of Management Review

•  LLSV (1999) “Corporate Ownership Around the World” Journal of Finance

• Pistor, K. (2005) "Legal Ground Rules in Coordinated and Liberal Economies."

• Aguilera and Williams (2009)

• Aggarwal, Erel, Stulz and Williamson (2007) “Differences in Governance Practices between the US and Foreign Firms: Measurement, Causes, and Consequences.” Ssrn paper

Session 3. SHAREHOLDER-ORIENTED MODELS AND AGENCY THEORY: THE CASE OF THE US

Topics: boards of directors, types of shareholders, shareholder-value, shareholder activism, institutional investors, public companies, compensation, agency theory, shareholders access to ballot; say on pay; annual reports; codes of good governance; SOX;

Required readings:

CASE1: California PERS (A), HBS # 291045-PDF-ENG

CASE2: California PERS (B) 201091-PDF-ENG

• Carter and Lorsch (2004) "Back to the Drawing Board," chapters 8 and 9.

• Jacoby

• Blair, M. (2003) “Shareholder Value, Corporate Governance and Corporate Performance: A Post-Enron Reassessment of Conventional Wisdom,” In Corporate Governance and Capital Flows in the Global Economy.

• Aguilera, R. V. and Cuervo-Cazurra, A. (2009) "Codes of Good Governance." Corporate Governance: An International Review.

• Lazonick, W. and O'Sullivan, M. (2000) "Maximizing Shareholder Value: A New Ideology for Corporate Governance," Economy and Society.  

• Dalton, Hitt, Certo, and Dalton (2007) "The Fundamental Agency Problem and Its Mitigation: Independence, Equity, and the Market for Corporate Control," The Annals of the Academy of Management.

Media:

• Anglo-American Capitalism on Trail (NYT, March 29, 2009)

• Recent Financial Upheavals (Freakanomics, NYT, Sept. 18, 2009)

• Executives vs. Directors (NYT, April 5, 2009)

• Executive Compensation (NYT, April 5, 2009)

• Corporate Boards in Turmoil  (WSJ, Sept. 06)

• CEOs & Boards (Oct. 5th, 2006- WSJ)

Video: The Audit Committee

Optional:

• Eisenhardt, K. (1989). “Agency Theory: An Assessment and Review.” Academy of Management Review.

• Hillman, A. & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource-dependence perspectives. Academy of Management Review. 28: 383-396.

• Westphal and Stern (2007) "Flattery Will Get You Everywhere (Especially if You Are a Male Caucasian)..."  Academy of Management Journal

• Armour, J., Deakin, S. and Konzelmann, S. (2003) ‘Shareholder Primacy and the Trajectory of UK Corporate Governance’, British Journal of Industrial Relations, 41, 3, 531-555.

• Gospel and Pendleton (2003) “Finance, Corporate Governance and the Management of Labour: A Conceptual and Comparative Analysis,” British Journal of Industrial Relations.

• Roe, M. Political Determinants of Corporate Governance, chapters 4 and 5.

• Bratton, W.W. (2002) ‘Enron and the Dark Side of Shareholder Value’ Tulane Law Review,May.

• Toms and Wright (2005) “Divergence and Convergence within Anglo-American Corporate Governance Systems: Evidence from the US and UK, 1950-2000,” Business History

• Bershire Hathaway Inc. Shareholder letters: http://www.berkshirehathaway.com/letters/letters.html

Session 4. EUROPEAN CORPORATE GOVERNANCE

Topics: Ownership types; concentration; employment systems; corporate control; diffusion; financial systems; capital markets; family ownership; foreign shareholders; Societas Europaeas;

Required:

 CASE2: Messier's Reign at Vivendi Universal, HBS, 405063-PDF-ENG.

• Enriques and Volpin (2007) “Corporate Governance Reforms in Continental Europe,” Journal of Economic Perspectives.

• Jackson, G. (2005) ‘Stakeholders Under Pressure: Corporate Governance Reform and Labour Management in Germany and Japan’ Corporate Governance: An International Review, Vol.13, No.3, May, p.419-428.

 Optional:

•  Dore, R. (2005) “Deviant or Different? Corporate Governance in Japan and Germany,” Corporate Governance: An International Review, Vol.13, No.3, May, p. 437-.

• Jacoby, S. M. (2007). "Convergence by Design: The Case of CalPERS in Japan." American Journal of Comparative Law.

• Franks and Mayer (1997) “Corporate Ownership and Control in the UK, Germany and France,” Journal of Applied Corporate Finance.

• Faccio and Lang (2002) “The Ultimate Ownership of Western Corporations.” Journal of Financial Economics.

• Ahmadjian, C. L. and G. E. Robbins (2005). "A Clash of Capitalisms: Foreign Shareholders and Corporate Restructuring in 1990s Japan." American Sociological Review 70(3): 451-471.

Session 5: CORPORATE GOVERNANCE IN EMERGING MARKETS: CHINA

Topics: emerging markets; state-owned enterprises; pyramidal groups;

Required:

CASE: Corporate Governance in China: Current Practice, Key Problems, HBS# 309058-PDF-ENG

Case: “PetroChina: International Corporate Governance with Chinese Characteristics” Center for Asian Business Cases, School of Business, The University of Hong Kong, HKU 184 (20 pages).

• Khana, T. (2009) “Learning from Economic Experiments in China and India” Academy of Management Perspectives.

• Guillén, M. and García-Canal (2009) The American Model of the Multinational Firm and the “New” Multinationals from Emerging Economies, Academy of Management Perspectives.

Optional:

• Tarun Khanna and Krishna G Palepu (2004) Globalization and convergence: Evidence from Infosys and the Indian Software Industry, JIBS

• Corporate Governance: International Review Special Issue on India and China.

• Ghemawat & Hout (2008) Tomorrow's Global Giants? Not the Usual Suspects

• Khana & Papaleu (2007) Emerging Giants- Building World-Class Companies in Developing Countries,

• Chung and Luo (2008) “Institutional Logics or Agency Costs: The Influence of Corporate Governance models on Business Group Restructuring in Emerging Economies,” Organization Science.

• Fan, Wong and Zhang (2007) “Politically connected CEOs, corporate governance, and post-IPO performance of China’s newly partially privatized firms,” Journal of Financial Economics.

• Keister and Zhang (2009) "Organizations and Management in China," The Academy of Management Annals

 

Session 7. BUSINESS GROUPS AND CORPORATE GOVERNANCE

Case: Korea

Session 8. MARKET FOR CORPORATE CONTROL AND HOSTILE TAKEOVERS

Required:

CASE: Vodafone AirTouch's Bid for Mannesmann, HBS# 201096-PDF-ENG.

• Höpner, M. and Jackson, G. (2006) ‘Revisiting the Mannesmann Takeover: How Markets for Corporate Control Emerge,’ European Management Review

• Dalton, Hitt, Certo, and Dalton (2007) "The Fundamental Agency Problem and Its Mitigation: Independence, Equity, and the Market for Corporate Control," The Annals of the Academy of Management.

Session 9. CORPORATE GOVERNANCE IN THE MULTINATIONAL FIRM

Session . CORPORATE SOCIAL RESPONSIBILITY

Required:

Case: Sustainable Development at Shell

• Waddock 2008 Corporate Responsibility

• Devinney  (2009) "Is the Socially Responsible Corporation a Myth?

Optional:

• The End of Corporate Imperialism  (Prahalad & Lieberthal 2008)

• Williams, C.A. and Aguilera, R.V. (2008) “Corporate Social Responsibility in Comparative Perspective.” Pp. 452-472 in A. Crane, A. McWilliams, D. Matten, J. Moon and D. Siegel (Eds.), Oxford Handbook of Corporate Social Responsibility.Oxford: Oxford University Press. Download paper.

Session . CORPORATE ETHICS AND THE GLOBAL FINANCIAL CRIESES

Required:

CASE: Adelphia Communications Corp.’s Bankruptcy, HBS# 208071-HCB-ENG.

• Davis G. (2009) The Rise and Fall of Finance and the End of the Society of Organizations. Academy of Management Perspectives.

• Capelli, P. (2009) The Future of the US Business Model and the Rise of Competitors, Academy of Management Perspectives.

• Whitley, R. (2009) U.S. Capitalism: A Tarnished Model? Academy of Management Perspectives

• Tenbrunsel and Smith-Crowe (2008) "Ethical Decision-Making: Where We've Been and Where We're Going," The Annals of the Academy of Management.

" Analysts Look Back on Historic Financial Year" NewsHour Interview 1/1/09 (15 min.)

"Change in Accounting Rules might Carry Big Impact." NewsHour April 2, 2009 (10 min.)

Harry Markopolos in www.youtube.com

Session . REVIEW AND FINAL EXAM