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International Corporate Governance
B. Espen Eckbo, Tuck Centennial Professor of Finance, Tuck School, and Director, Center for Corporate Governance
Next time offered: TBD
This course debates corporate governance systems and practices around the world. We begin with the fundamentals of law and finance: how a country’s legal system affects cost of capital and financial development. We then move more specifically to conflict resolution between the various constituencies of the firm, including incentive alignment between owners (shareholders) and their representatives (board and management), and the need to protect fundamental shareholder rights. There is a growing recognition of the need for reforms that reduce shareholder costs of monitoring management. Proposed reforms include greater transparency in issues ranging from accounting standards to executive pay and to corporate social responsibility. There is also a strong movement, especially among pension- and hedge funds, to reform fundamental shareholder rights. Proposals include simplified board election processes, and enhanced opportunities for binding shareholder resolutions at the general meeting. Collectively, these proposals radically alter the balance of power between shareholders and corporate insiders. Corporate insiders often resist reforms that bring shareholders “too close” to the firm’s decision making processes. The course brings out this controversy through a combination of lectures, academic readings and in-class debate with industry leaders.
Advanced Corporate Finance
B. Espen Eckbo, Tuck Centennial Professor of Finance, Tuck School, and Director, Center for Corporate Governance
Next time offered: Spring, 2009
This course surveys much of the scientific evidence in the field of corporate finance. The purpose is to help students develop a way of thinking about and quantitatively frame corporate finance decisions facing executives, management consultants, and investors. The readings and class discussions are largely non-technical, but students must have a good understanding of basic statistics and regression analysis. We discuss studies addressing (1) costs of alternative methods of raising capital, (2) capital structure choice and dividend policies, (3) costs associated with financial distress and bankruptcy, and (4) shareholder engagement policies and corporate control transactions. Working in groups of two, students are responsible for submitting weekly summaries of assigned readings, presenting individual articles to the class, as well as a final term project.
Corporate Restructuring
Karin S. Thorburn, Assistant Professor of Business Administration, Tuck School, and Associate Director, Center for Corporate Governance
Next time offered: Winter, 2009
This course exposes students to a broad range of financial restructuring techniques that can be applied to increase firm value. Case discussion and visitors help illustrate how various corporate restructuring approaches may be used to improve business performance and highlight characteristics of potential candidates for different restructuring techniques. The case analysis provides ample opportunity to practice the application of standard corporate valuation methods. Participants will gain a basic understanding of corporate governance, with particular focus on agency problems and managerial incentives.
The first part of the course deals with financial restructuring techniques aimed at strengthening the firm’s competitive situation. Such restructurings can be initiated as a response to poor business performance caused by e.g. changes in technology or customer demand, or to avoid a takeover threat. Topics include divestitures, spinoffs, splitoffs, equity carveouts, leveraged recapitalizations, and leveraged buyouts.
The second part focuses on the restructuring of financially distressed firms. Since bankruptcy provides a threat point for any distressed restructuring, the legal framework of the U.S. bankruptcy code is examined. The topics of this section are private workouts, prepackaged bankruptcy filings, and restructuring in bankruptcy. We will discuss the importance of market mechanisms in resolving bankruptcy, including the role of distressed investors and difficulties in valuing bankrupt firms.
The course is intended for students with an interest in learning about the financial, strategic, and business issues surrounding corporate restructuring. It will be useful for a range of careers, including investment banking, commercial banking, turnaround management, general management, strategy consulting, securities analysis, and investment management.
Structuring Mergers & Acquisitions (FLGI)
Karin S. Thorburn, Assistant Professor of Business Administration, Tuck School, and Associate Director, Center for Corporate Governance
Next time offered: Spring, 2009
This is a course on corporate mergers and acquisitions (M&A). Students will develop skills necessary to structure a deal or form an opinion about a proposed transaction. Topics include value creation in mergers; choice of payment method; valuation of contingent payments; deal protection devices; incentive effects of deal financing; merger arbitrage; defensive tactics; market consensus estimates; accounting and tax issues, and leveraged buyouts. We discuss bidding strategies and takeover tactics. Students get to practice merger negotiations in a team exercise. We also cover the legal and regulatory framework for takeovers, such as filing requirements, fiduciary duties of the target board of directors, and antitrust regulation. The course uses a mix of case analysis, providing ample opportunity to practice the application of standard corporate valuation methods, lectures and visitors.
