Corporate Governance and Financial Decisions: Course Introduction Department of Business Studies, Uppsala University, Lecturer: Katarzyna Cieslak 2018/01/15

The course in a nutshell Learning objectives Teaching philosophy Course structure/schedule Literature Examination

Two key concepts Corporate governance Financial decisions ’The system by which companies are directed and controlled’ (Cadbury, 1992) ’The control and direction of companies by ownership, boards, incentives, company law, and other mechanisms’ (Thomsen & Conyon, 2012) ’Corporate governance is about mechanisms by which scarce decision making resources are allocated in society’ (Bengt Holmström) Financial decisions Decisions on how the firm relates to financial markets. For example: The choice between equity and debt financing The choice to distribute funds from the operations to the financiers The choice to acquire another company

Learning objectives The purpose is to enable students to increase their understanding of how companies are efficiently governed, and of how financial decisions are affected by corporate governance. As a Master level course, a considerable portion of the learning is based on seminars and individual literature reviews. Students are encouraged to develop a critical way of thinking in regards of how decisions are and ought to be made.

Learning objectives cont. In specific, participants will develop the following skills: An understanding of how corporate governance systems vary between countries and regions. An understanding of how owners can monitor and direct management in their financial decision‐making. An understanding of how various financial decisions relate to and are affected by corporate governance systems. Evaluating corporate governance systems and applying corporate governance theories in different contexts. Summarizing and interpreting academic research articles, as well as presenting and leading academic discussions.

Fundamental pedagogical idea This is an advanced course in which ”active learning” is central. Students are asked to identify problems worthy of studying within a given academic framework. Students are given examples of problems, they get feedback on their choice of problem and they present their problem and solutions at seminars. Seminars require active participation from all participants. The teacher’s role is to motivate the student during the process in which students learn, and to evaluate whether a student is capable of identifying relevant problems.

Overall structure Lecture 1: Law and Finance Lecture 2: Cross-country differences in governance Lecture 3: HBS case: Banco Espirito Santo Lecture 4/ Seminar 1: Capital structure decisions Lecture 5/ Seminar 2: Dividend policy decisions Lecture 6/ Seminar 3: Ownership and corporate performance Lecture 7/ Seminar 4: Investment decisions/Telia Sonera Case Lecture 8: Executive compensation

Seminar work Topic 1 – Topic 4 Introduction lecture Introduces an area in finance: what are the interesting questions? Which literature will we read? Which issues can mini‐cases and paper topics deal with? Individual reading assignment 2-3 pages. Each student summarizes the literature and uploads her/his summary to Studentportalen before working together with other group members. Tutoring possible It is possible to get help on issues that you got stuck on. Note that teachers do not help you with technical issues nor the writing itself, but on how to structure ideas (for your paper). Group seminar task 5-6 pages. Each group identifies, explains and provides a brief answer to a research problem. The document is uploaded to Studentportalen the day before the seminar. Seminar discussions Two‐hour seminars led by students. 2x45 minutes with discussions.

Schedule

Individual assignment For each lecture students are asked to read 3-6 articles in the area that we deal with. Before we start with group work for Seminars 1-4, each student must read and summarize the articles individually. The teachers do not thoroughly assess the quality of the individual assignment. We read your text and assure that it is unique, i.e. That it is not the research articles abstracts and it is not a copy of somebody else’s text.

Tutoring In each week (Seminar 1-4) it is possible to book time for tutoring See details provided by each lecture More general questions are answered by Katarzyna (B287). Send an email and come by my office – you are always welcome. It is not our role to give you solutions to problems, but instead we help you to pinpoint your problem if you get stuck. It is not required to meet the teacher in every week.

Seminars 1-4 The seminar is the most important component of the learning process. It is obligatory. At the seminar we discuss the area that has been studied during the week. One student group leads the discussion and this requires the plan. Active participation is required. Students are required to hand in material relating to the seminar: The group’s seminar paper dealing with each week’s seminar is due the day before the seminar. Upload on Studentportalen. Prepare a plan of how to lead a seminar (1-2 pages), including e.g.: the style of the seminar (one large group only, smaller groups, a case etc.), discussion questions.

Teachers Jiri Novak Jiri.novak@fek.uu.se, jiri.novak.cz@gmail.com Michael Grant michael.grant@fek.uu.se, Katarzyna Cieslak katarzyna.cieslak@fek.uu.se

Literature Students download the assigned articles. The complete list is available in the Study Guide in Studentportalen. Should you have any problems contact katarzyna.cieslak@fek.uu.se The literature is intentionally difficult to read. You are not asked to understand everything (references to other articles, advanced methodologies, details in empirical analyses, robustness tests, etc.) Use details whenever you need it for your seminar papers. Let the Study Questions (in Studentportalen) guide you through the material.

Examination Grades are determined by a written individual exam (40%) and seminar work (60%). The written exam is taken at the end of the course (Feb 17th, retake April 8th). It relates to concepts and (overall) findings in a set of 22 research articles, it is also based on lectures’ material Study questions which may help in preparation will be available during the first week of the course. To pass a course each student must obtain at least 50% of available points (i.e. 50 points) & a pass (above 50%, i.e. at least 20 points ) at the written examination. Points for seminar work are distributed for each of Seminar 1-4 seminars (4 X 15 points) To obtain any points for the seminar work, a student must hand in the individual paper on time, participate in the group work (the group paper and discussion preparation) and be active at the seminar

Examination cont. Individual paper (2-3 pages) Recapitulate the assigned literature on a stand-alone basis. Group seminar paper (5-6 pages) Introduction, identify a problem (purpose of the paper), analysis of literature, conclusions. Academic standard. Well-written text. Front page. Arguments backed with references. Group presentation plan (1-2 pages) Explain the structure of the seminar, how you want to accomplish this and the learning objectives. Time frame. Be specific: ’Discuss the following questions’, ’Create three new groups’...

Grading The final grade is based on the combined score of the four seminars and the individual written exam. Students cannot expect to receive detailed feedback on the seminar papers prior to the next week’s deadline. Swedish grade   ECTS Points achieved Pass with distinction VG A 90-100 points B 80-89 points Pass G C 70-79 points D 60-69 points E 50-59 points Fail U F 0-49 points

Practical issues Find 3 persons to work with Register for a group in Studentportalen untill Wednesday 18.00 (’Group division’). Groups A (A1, A2, etc.) have seminars at 8.15, groups B (B1, B2, etc.) have seminars at 10.15, groups C (C1, C2, etc.) have seminars at 13.15. Thursday morning Golondrian (golondrian.janke@fek.uu.se) will look into the divisions and assign all remaining students (until lunch?) On Friday there is the first dealine for individual paper on Seminar 1 On Tuesday at 12 there is the first deadline for the group paper on Seminar 1.