(Thursday, 22nd May 2014)
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The growth of capital markets and of reliance on equity financing have focused research on developing our understanding of fundamental characteristics of stock markets, asset pricing and trading. Considerably less research was focused on corporate governance until a couple of decades ago when massive corporate scandals shook the markets and public opinion. Since then, corporate governance has become a well-established research field investigating roles, forms and effectiveness of governance structures and practices, of managerial incentives, of shareholder activism, of market for corporate control and the political economy of corporate governance. The existence of numerous regulatory regimes, cultural paradigms and practices shaped though centuries of countries’ historical, legal and political development make corporate governance a complex and rich subject. This, however, implies that consensus is rarely reached. Even potentially basic questions such as what is good corporate governance, remain unanswered.
The current financial crisis has reopened the debate on the role of corporate governance and agents (in particular, big institutional investors), and the desired balance between governance and regulation. In addition, executive remuneration remains a hotly debated topic. Policy makers and regulators add to the fever since their quick-fix knee-jerk policies do not always lead to desirable outcomes. The lecture will provide an overview of the evolution of corporate governance over the last few decades and highlight the development of the research focus in the field. It will discuss advances in corporate governance literature with a particular focus on executive remuneration issues.
Bibliographical references :
Must read reference : A. Zalewska (2014), “Challenges of corporate governance: Twenty years after Cadbury, ten years after Sarbanes-Oxley”, forthcoming in the Journal of Empirical Finance
L.A. Bebchuk and M.S. Weisbach (2010), “The state of corporate governance research”, Review of Financial Studies 23(3), 939- 961.
P.A. Grout and A. Zalewska, (2012), “The effect of option granting on executive stock purchases”, Economics Letters 114, 12-15; (or the longer but easier to read version available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=891070 )
A. Zalewska (2014), “Gentlemen do not talk about money: The case of British boards”, Journal of Empirical Finance, forthcoming.