BU.231.720.

XX – Corporate Governance – Instructor – Page 1 of 10

Corporate Governance
2 Credits

BU.231.720.XX

[Day & Time / ex: Monday, 6pm-9pm]

[Start & End Dates / ex: 8/20/18–10/15/18]

[Semester / ex: Fall 2018]

[Location / ex: Washington, DC]

Instructor
[Full Name]

Contact Information
[Email Address]
[Phone Number, ###- ###-#### (Optional)]

Office Hours
[Specify the day and time of the 2 hours that will be dedicated to office hours each week. For evening
classes, faculty may wish to hold their office hours by phone or email. While faculty are permitted to state
“and by appointment,” office hours should not be held exclusively by appointment.]

Required Texts & Learning Materials

1) Lecture notes by Demir Yener: Corporate Governance: A Primer (DY). We shall follow instructor
notes mostly.
2) Other cases and readings to be distributed through Blackboard as required.

Recommended Text
1) Monks, R. A. G., & Minow, N. (2011). Corporate governance (5th ed.). Wiley-Blackwell. ISBN 978-
0-470-97259-5.

Please see other required and recommended readings in the class schedule.

Course Description
The value of a firm depends on good corporate governance practices protecting investors. Greater
protection of shareholders lowers the cost of capital due to better risk mitigation. Thus, the set of
governance practices, rules, and regulations that promote private sector investment and jobs creation also
promote firm value. Topics include the role and responsibilities of shareholders (principals), the boards of
directors (the principals' representatives), and the executive management (agent). They also include
executive compensation policies, boardroom structure and practices, corporate disclosure and
transparency, and the value of the shareholder vote. The course looks into corporate pyramidal structures,
hostile takeovers, and the failure of the market for corporate control. It examines the role of financial
institutions and credit rating agencies in promoting corporate governance, and how transparency,
accountability, responsibility, and fair and equitable treatment of all shareholders help improve corporate
governance and reduce agency conflicts between principals, management, and the board of directors.

Prerequisite(s)
BU.231.620 Corporate Finance
Investments is recommended.
Course Overview
Corporate governance is the set of mechanisms used to manage the relationship among stakeholders and
to determine and control the strategic direction and performance of organizations.
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Much of the productive capacity of the global economy is owned by business enterprises in the form of
corporations. One of the key aspects of the corporation is the separation between ownership and control,
which is the foundation of the Agency Theory, also known as the Principal–Agent Theory. Corporate
governance seeks to prevent conflicts of interest among shareholders (principals) as the main owners or
investors and management (agents) in the firm. The board of directors represent the shareholders at the
firm.
While separation between owners and management allows corporations to exist independent of the life of
owners and to attract professional expertise, it creates an agency problem in which agents may act in their
own interests at the cost of owners. Due to the imperfect contracts and information asymmetry, various
corporate governance mechanisms exist and keep evolving.
For this reason, we focus on strengthening the four values of corporate governance: Transparency,
accountability, responsibility, and fair and equitable treatment of all shareholders as the mantra for this
course.
The corporate governance issues have attracted public attention because of a series of corporate events
and scandals (e.g. Wells Fargo, Volkswagen, Swissair, Enron, WorldCom, UBS, etc.). As a result of the
exorbitant risks taken by management of large financial institutions leading to the recent financial crises
and corporate scandals, a number of global institutions worked together to issue standards and principles
that will provide guidance for a number of business and trade related activities, including corporate
governance.
OECD introduced the principles of corporate governance in 1999, which was revised in 2004 and 2015.
This has become standard corporate governance guidance to many international applications and legal
and regulatory frameworks. In the United States, the Sarbanes–Oxley Act of 2002, and the Dodd–Frank
Act of 2010 provide the regulatory framework for the U.S.-based corporations, with global reverberations.
Corporate governance has become an increasingly important topic among shareholders, the management
and the boards of directors, as well as other corporate stakeholders and government regulatory agencies
on how firms are being governed and the effectiveness of corporate governance. The course addresses
this broad issue with cases.
Finally, the course places a good deal of emphasis into building the business case for good corporate
governance practice rather than looking at it as simply as an issue for compliance legal and regulatory
frameworks.
Learning Objectives
By the end of this course, students will be able to explain, evaluate and analyze:
1. The global best practice knowledge in corporate governance environment, the corporate forms,
proper corporate, legal, and regulatory frameworks necessary to perform the duties of the board in
protecting the rights of the shareholders.
2. The causes and consequences of agency problems due to inherent conflicts of interest between
shareholders, the board of directors, and the executive management and other stakeholders in
governance.
3. The global best practice principles of corporate governance as defined by OECD and other
international and US conventions.
4. How transparency, responsibility, accountability, and fair and equitable treatment of all
shareholders form the basis of good corporate governance practices.
5. The relationship between corporate governance, corporate finance, investments and shareholder
wealth maximization.
6. The tools for assessment and scoring of corporate governance practices for investors.

To view the complete list of the Carey Business School’s general learning goals and objectives, visit the
Carey website.
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Assignments

Assignment Learning Objectives Weight

Attendance and participation in class discussions 1–6 10%
2 Quizzes (Due dates: Week 3 and Week 5) 1–6 30%
CG Assessment and Rating Paper and Presentation/Submission 1–6 20%
(Week 7)
Final Exam (Comprehensive) (Week 8) 1–6 40%
Total 100%

1) Attendance and Class Participation (10%)

Attendance and participation are an important part of your course grade. Students are expected to
attend all scheduled class sessions. Each class will include opportunities for teams to work together.
Failure to attend class will result in an inability to achieve the objectives of the course. Full attendance
and active participation are required for you to succeed in this course. Please inform the instructor if
you must miss a class.
If you anticipate that you will miss two or more lectures due to business reasons or other, I strongly
recommend you consider dropping this class and find another time to take it.
Students will benefit most on the topics covered in this course through actively participating in
classroom interaction. Attendance and classroom participation will account for 10% of the course grade.
Active participation and contribution to insightful discussions will receive higher grade in classroom
participation.
2) Two Quizzes (15% each= 30%)
There will be two quizzes through the period, each accounting for 15% of the final grade. Each quiz will
cover the contents delivered in previous lectures and will take 20 minutes. The quiz format may consist
of True/False problems, multiple choice, and/or short essay problems. Students who have to miss the
scheduled quiz should contact the instructor. Quiz make-ups are not possible. Students should try not
miss a quiz as it will affect the final grade.
3) Corporate Governance Assessment Project and Presentation (20%)
The instructor will distribute a corporate governance rating survey instrument (CG Rating Survey) to all
students at the beginning of the session. The survey instrument was prepared by the instructor for the
purpose of corporate governance rating of listed companies and it is currently in use in a number of
locations. Please check the Blackboard Assignments section for further detailed instructions.
Each student will be assigned (by the instructor) one publicly traded company (preferably an S&P 500
firm) at the beginning of the session. This is the company the student will analyze and assess the
corporate governance compliance and identify any weaknesses.
You will conduct research on recent corporate governance related articles about the S&P 500 company
you have been assigned.
These sources may include the corporate website, the U.S. Securities and Exchange Commission
EDGAR website, the NYSE, or the Wall Street Journal or other business periodicals (FT, Fortune,
Forbes, Bloomberg, CNBC, etc.).
Please try to contact the reference librarian who will provide you with guidance regarding other sources
JHU library has.
a- About the Corporate Governance Survey and Scoring project:
 This is an individual project.
 You may work as a group or individually as this will facilitate your understanding of the topic.
The paper is individually graded.
 Individuals or teams may request meetings with the instructor as required to clarify any issues.
 The final project will be submitted via Blackboard by each individual student on due date.
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The goal of this assignment is to conduct a corporate governance scoring survey and provide the
corporate governance assessment of a listed company based on the OECD principles of corporate
governance.
The learning objective of this exercise is to understand how the CG Principles are operationalized.
Students will write a corporate governance assessment paper and provide recommendations. Papers
will be individual.
This paper is worth 20 points towards the final grade.
b- Guidance on structural details of the project:
Write your paper in MEMO format to the investment committee at your company.
The paper should not exceed the maximum of 6–8 pages, excluding appendices.
There is no limit on the number of appendices you may provide.
Try to be concise in your report. Avoid using language directly from any website; make sure you
properly reference all statements from any sources.
Summarize the information in your own words, and provide references when necessary.
Please use the following structure for your Corporate Governance Scoring, Rating, and Assessment
paper:
The Corporate Governance Survey Project is 20 points total towards your final grade.
Details are as follows:
i) Executive Summary/Introduction (2 points): (1–2 pages maximum) Using the data you have
collected from the company website and other publicly available information, prepare the
executive summary that should clearly state the objectives, background and the main findings
of your corporate governance assessment paper on the selected company.
ii) Company Background (1 point): (1 page maximum) Prepare a brief, one page maximum
review of the company background, important issues reported in its US SEC filings, and other
information you have collected. You may provide the following information in an attached
exhibit, with proper references provided.
(1) The company organization, its values, vision, mission, products (keep it very short);
(2) Corporate financial information, revenues, capitalization, stock price, ROE, ROI, PE ratio,
Book/Market ratio, its management team and corporate governance practices. Using a
table in the appendix, discuss some of the highlights. (prepare a short table of information
and attach it to the end in an appendix);
(3) Do not simply copy and paste from company web site. Summarize the information in your
own words.
(4) Make sure you provide references properly. Provide the list of references at the end of the
report.
iii) The Written Report on CG Survey Results (10 points): (2–3 pages maximum) Using the
100-question CG survey instrument you are provided, determine your survey findings and
calculate the CG score. Using the guidance in the provided survey instrument, rank this
company (from 1–5) based on your survey score. A suggested structure is as follows:
(1) Process the 100 questions in the Excel spreadsheet survey, summarize your findings,
provide charts and exhibits. Try to keep it short.
(2) If and when appropriate, explain why some of the survey questions may or may not be
applicable.
(3) Discuss your CG Scoring findings. Copy and paste the summary table and the chart into
your report (from the top of the spreadsheet that automatically populates the results). (DO
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NOT INCLUDE THE COMPLETED EXCEL SPREADSHEET SURVEY WITH YOUR

REPORT)
(4) Discuss specifically the corporate governance Strengths, Weaknesses, Opportunities and
Threats (SWOT), and how some of the observations you have made relate to pertinent
topics covered in the course.
 If you source any data from the company web site, provide reference.
 For any such information, you may paraphrase and write it in your own words.
iv) Findings and conclusions (5 points): (2 pages maximum) Provide a small summary table of
findings and discuss the SWOT. Discuss any of the available corporate governance
mechanisms that are relevant to the chosen firm and the advantages and disadvantages of
those mechanisms. While discussing your findings, try to bring in academic literature and/or
provide practical evidence to support your argument.
 Discuss the main CG issues that you identified given the theoretical background.
 The conclusions should summarize the main findings and discuss their implications for the
particular firm, investors, regulators and the economy.
 Your recommendations should have three to five specific points the company board could
do to improve a situation you have determined in the company.
v) Attachments (2 points): Include references, charts figures and/or tables as evidence to
support your report.

vi) Class Presentation/Discussion (2 points): This is part of class participation, in addition

to the written report.

At the beginning of the 7th lecture period, we shall go around the class. Each student will discuss
a very brief summary of their papers within a maximum of 3–5 minutes (OR LESS,
DEPENDING ON CLASS SIZE) to present the findings and lessons learned. There will be
some time for Q&A and comments session. The instructor will grade the quality of the
presentation and delivery of the message. This is due Week 7.
Class discussion/Presentation of your findings is considered as part of the “Class Participation”
and will be graded accordingly.
 Instructor will require students to turn in their CG score and some other data for their
company in an Excel spreadsheet. The instructor will collect this data, and prepare a
summary of the class findings of the ratings for discussion in class on Week 7.
 Instructor may decide to make adjustments to the presentation schedule depending on
class size and time limitations.
- For class discussion, summarize your paper in a maximum of 5 bullet points.
- The final written report is due two to three days following the class discussion on
Week 7. Students will be given further instructions on first day of class.
 The final company CG scoring and assessment report must be submitted via
Blackboard.
4) Final Exam (40%)
The final will be a 3-hour, in-class, comprehensive, closed-book exam on the eighth session.
Grading
The grade of A is reserved for those who demonstrate extraordinarily excellent performance as determined
by the instructor. The grade of A- is awarded only for excellent performance. The grades of B+, B, and B-
are awarded for good performance. The grades of C+, C, and C- are awarded for adequate but substandard
performance. The grades of D+, D, and D- are not awarded at the graduate level (undergraduate only). The
grade of F indicates the student’s failure to satisfactorily complete the course work.
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Please note that for Core and Foundation courses, a maximum of 25% of students may be awarded an A
or A-; the grade point average of the class should not exceed 3.3. For Elective courses, a maximum of
35% of students may be awarded an A or A-; the grade point average of the class should not exceed 3.4.
(For classes with 15 students or fewer, the class GPA cap is waived.)

Tentative Course Calendar

Instructors reserve the right to alter course content and/or adjust the pace to accommodate class
progress. Students are responsible for keeping up with all adjustments to the course calendar.

Texts:
1- RECOMMENDED: Monks and Minow (M&M). Corporate Governance (5th ed.). 2011.
2- Demir Yener (DY). Corporate Governance: A Primer. 2016.
3- Demir Yener (DY) Class Power Point Lecture Notes – Updated as required
4- Other readings and cases as distributed by the instructor

Session Content Reading Note

Week 1 Lecture 1: An Introduction M&M. Chapter 1: What is a Corporation? Principal–
to Corporate Governance: Agent Theory.
The Corporation, Strategy DY Lecture 1: Introduction to Corporate Governance.
Formation and Value Agency Theory. Principles of Corporate Governance.
Creation.
Reading: Leading articles and DY lecture notes:
(1) Jensen and Meckling (1976). “Theory of the Firm:
Managerial Behavior, Agency Costs and Ownership
Structure.” (2) Fama and Jensen (1983) Separation of
Ownership and Control.
Case: TBD

Week 2 Lecture 2: Ownership and M&M. Chapter 2: The role of Shareholders and
Shareholders. Ownership
DY Lecture 2: Shareholders and Shareholder Activism
Reading: M&M Ch 2 and DY lecture Notes
Case: TBD

Week 3 Lecture 3: The Board Of M&M. Chapter 3: The role of Directors and Monitoring Quiz #1
Directors DY Lecture 3: The Board of Directors
Reading: M&M Ch 3 and DY lecture Notes
Case: TBD

Week 4 Lecture 4: The M&M. Chapter 4: The role of Management: Principal–

Management and Agent Issues.
Compensation DY Lecture 4: Executive Management and CEO
Compensation Issues. Succession Planning
Reading: M&M Ch 4 and DY lecture notes.
Case: TBD

Week 5 Lecture 5: Transparency, M&M: N/A Quiz #2

Disclosure, and DY Lecture 5: Transparency, Disclosure, and Firm
Communication. Value Implications. M&A and the Role of Financial
Institutions
Reading: DY Lecture notes.
Case: TBD
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Session Content Reading Note

Week 6 Lecture 6: Corporate DY Lecture 6: Corporate Social Responsibility.
Social Responsibility Stakeholders.
Reading: DY Lecture notes and other
Case: TBD

Week 7 Lecture 7: The M&M. Chapter 7: International Corporate Governance. Project

International Environment OECD and BIS Principles. Implementation. Pitfalls. Discussion and
for Corporate Governance Final Review. Project Reports
DY Lecture 6: The International Environment for CG due today
Reading: M&M Ch 7 and DY Lecture notes
Case: TBD

Week 8 No lecture. Exam 3-hour comprehensive final exam. Final Exam

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Course Summary

Part I: An Introduction to the Role of the Board and Corporate Governance:

Lecture 1: An Introduction to Corporate Governance: Strategy Formation and Value Creation and the
External Legal and Regulatory Environment
Purpose: To explain the concept of corporate governance and to discuss the legal and regulatory
frameworks for corporate governance and their relevance
Topics covered: Forms of Business Ownership; Separation of Ownership and Control: Principal-Agent
Dilemma; History, Definition, Concept, and OECD Principles of Corporate Governance; Strategy
formulation and vision mission concepts; Benefits of Good Corporate Governance; Systems of Corporate
Governance. The Theoretical Framework and Worldwide Developments; The International Corporate
Governance Framework; The US (Sarbanes–Oxley and Dodd–Frank) and International Corporate
Governance Framework; Global and Local Agencies that Provide Leadership and Guidance in Corporate
Governance
Part II: Practical Tools for Monitoring, Strategic Guidance and Managerial Oversight:
Lecture 2: Ownership and the Role of Shareholders
Purpose: To explain the role of shareholders as owners, the concept of shareholder activism and its
effects on corporate governance
Topics covered: The International Perspective on ownership and rights and responsibilities of share
ownership; Shareholder Representatives: Non-Executive and Independent Directors; What Is
Shareholder Activism? Activism by Individual, Large, and Institutional Shareholders; Potential Roadblocks
to Effective Shareholder Activism.
Lecture 3: The Role of Board of Directors
Purpose: To provide an overview of the board’s purpose, role and authority
Topics covered: When to Create a Board; Why Boards Are So Important; Understanding the Difference
Between the Board and Management; Board Size, Composition, and Evaluation; The Role and Authority
of the Board
Lecture 4: The Executive Management and Compensation
Purpose: To familiarize the students on the nuances between the role of the board in strategy
formulation and providing oversight to the management in the formation and implementation of strategy
and the realization of the corporate mission, goals and objectives.
Topics covered: The role of the board in management; The Agency problem; Strategy formation;
Competitiveness; Board relationships; Role of the board in determining CEO compensation; Leadership;
Directors’ knowledge of the business
Part III: The Role of the Board in Transparency and Disclosure:
Lecture 5: Disclosure, Transparency and Communication
Purpose: To explain the tools that ensure transparency of companies through proper disclosure.
Transparency and timely disclosure is a duty of the board for shareholder protection. It requires timely
and accurate disclosure on all material matters regarding the corporation
Topics covered: Reading and understanding the financial statements of a company; Defining Disclosure
and Transparency; Effective Tools for Disclosure; Information Flows and Clear Communication Channels;
Understand the significance of accounting and auditing for governance; Appreciate importance of timely
and accurate disclosure; How much disclosure is adequate disclosure?; Role of the board in
Shareholders protection through disclosure and transparency.
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Part IV: Special Topics:

Lecture 6: Corporate Social Responsibility
Purpose: To explain the concept of corporate social responsibility
Topics covered: A Changing World for Companies: Demanding stakeholders; The Stakeholder View of
the Firm; The Concept of Corporate Social Responsibility; International Aspects of Corporate Social
Responsibility; The Criticism of Corporate Social Responsibility.
Lecture 7: International Corporate Governance Environment and Conclusion
Purpose: To discuss the international corporate governance environment and global best practices,
provide conclusion and review
Topics covered: Implementing the OECD Corporate governance standards in different jurisdictions,
including the United States, European Union countries and emerging countries. Corruption and impact on
cost of capital. Access to finance. Regulations and agency costs. Does self-regulation work? Review and
Conclusion
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Carey Business School Policies and General Information

Blackboard Site
A Blackboard course site is set up for this course. Each student is expected to check the site throughout the
semester as Blackboard will be the primary venue for outside classroom communications between the
instructors and the students. Students can access the course site at https://blackboard.jhu.edu. Support for
Blackboard is available at 1-866-669-6138.

Disability Support Services

All students with disabilities who require accommodations for this course should contact Disability Support
Services at their earliest convenience to discuss their specific needs. If you have a documented disability, you
must be registered with Disability Support Services ([email protected] or 410-234-9243) to receive
accommodations. For more information, please visit the Disability Support Services webpage.

Academic Ethics Policy

Carey expects graduates to be innovative business leaders and exemplary global citizens. The Carey
community believes that honesty, integrity, and community responsibility are qualities inherent in an exemplary
citizen. The objective of the Academic Ethics Policy (AEP) is to create an environment of trust and respect
among all members of the Carey academic community and hold Carey students accountable to the highest
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It is the responsibility of every Carey student, faculty member, and staff member to familiarize themselves with
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