Ateneo - UPO

In recent years, a number of corporate scandals (Enron, Parmalat, Lehman Brothers) around the world have reinforced the perception that managers are unwatched. The course starts by emphasizing the importance of managerial accountability. Then, the course offers a review of the various instruments and factors that help align managerial incentives with those of shareholders. A special attention is devoted to the objective of the firm, namely, whom managers should be accountable to.

The course contents might be modified to include seminars or lectures by Visiting Professors.

Brickely, Smith, Zimmerman - Managerial Economics and Organizational Architecture. Irvin McGraw Hill, sixth edition
Tirole. The Theory of Corporate Finance. Princeton University Press (capitolo I).

1) Knowledge and understanding skills.
Knowledge of governance systems and manager incentive issues in light of corporate goals and performance.

2) Ability to apply knowledge and understanding.
To be able to identify governance systems and manager incentive problems and envisage solutions for the firm.

3) Autonomy of judgment.
To use economic analysis to discriminate among alternative governance models useful in interpreting empirical evidence on incentive conflict issues.

4) Communication skills.
To be able to understand the impact in terms of value to the firm and stakeholders of different corporate governance structures and managerial incentives.

5) Learning skills.
To be familiar with the relevant literature on the topic of managerial incentives and corporate governance, and the main evidence on the consequences of incentive conflict and governance structures, particularly in Italy and Europe.

The course does not require any particular prerequisite.

Teacher-led lessons (theory and exercises), possible presentations in class.

Attendance is not mandatory but highly recommended.

Other useful resources:
https://ideas.repec.org/
http://www.ssrn.com/en/
www.scholar.google.com
www.scopus.com
Department’s electronic resources:
http://apps.webofknowledge.com/UA_GeneralSearch_input.do?product=UA&search_mode=GeneralSearch&SID=Z1PHRcE6xJX5IyMyunz&preferencesSaved=

Students with physical disabilities, Learning Disabilities or Special Education Needs can request specific services and tools via the Staff Sviluppo e Coordinamento Carriere e Servizi alle Studentesse e agli Studenti, consulting the University webpage: https://www.uniupo.it/en/services/servicesstudents-physical-or-learning-disabilities Students with disabilities, learning disabilities or special education needs, once they have contacted the University Staff, can refer to the tutor in charge of the course to define the examination modalities, concerning academic aspects.

The exam is written (in English) and consists of three parts: 1) an open question on fundamental aspects of the course (up to 10 points, that can be replaced with a presentation in class, as detailed below), 2) an exercise divided into several sub-points (up to 11 points), 3) a series of specific questions of a mainly technical nature (up to 11 points). The duration of the test is 1 hour and 30 minutes. The presentation in class (no more than 20 minutes) must focus on the analysis of one or more scientific articles chosen among those included in the course material. The maximum number of tests that can be taken in a year is three.
The exam focuses on all the material mentioned in the "Textbooks" section, including the slides used in class.
Examples of questions and exercises included in the written exam can be found in the "Self-evaluation problems" and "Review questions" sections at the end of each chapter of Brikley, Smith, Zimmerman (sixth edition). The maximum achievable grade is 32/30 ("trenta e lode").

1) Incentive conflicts and contracts
2) Controlling incentive problems in firms through contracts
3) Implicit contracts and reputational concerns
4) Incentives compensation
5) Corporate governance
The course programme might be modified to include seminars or lectures by Visiting Professors.

At the end of the course, the student will be able to:
1.Define the firm as a focal point for a set of contracts.
2.Identify important owner-manager conflicts, as well as other potential stakeholder conflicts.
3.Explain how contracts can be used to help control incentive problems.
4.List the important trade-offs in effective compensation plans.
5.Identify the various forms of incentive pay and discuss the controversy surrounding incentive pay.
6.Describe the decision authority and incentives of shareholders, boards of directors, and top management of large corporations.
7.Explain how market forces contribute to corporate governance.