Failing Corporate governance of financial institutions has often been mentioned as an important cause of the crisis. Consequently, having a deeper understanding how corporate boards are formed and how they act have become a topic of increasing importance. Do you want to know how corporations are directed and how we can make them perform better? This course will provide you with the answers! On top of that, we will visit the Euronext Amsterdam, the Dutch Stock Exchange, where you can practice your skills as a trader.
Hundreds of billions of dollars in valuation has been lost due scandals caused by failing corporate governance. This has been especially evident since 2000, and was highlighted in the recent global financial crisis of 2008, where firms that were perceived to be “too big to fail” had to be financially bailed out with public funds. Notable examples of this include the AIG, ING, Parmalat and Ahold (while many others, such as Lehman Brothers, Bear Stearns and Enron) ceased to exist. These scandals also contributed to a climate in which trust – a critical element in financial and legal structures – is seriously harmed: between consumers (who themselves lost tremendous wealth) and companies (who were saved by government handouts from these very same consumers); between investors and directors. Together with the Financial Crisis, these scandals inspired (semi) self-regulating bodies, governments, the EU and organizations like the OECD to take initiatives to improve corporate governance routines and safeguards. In some cases, the regulatory response to the crises may have resulted in regulatory over-reach, in both the US and EU. Corporate Governance Codes were altered and Codes for Financial Institutions were drafted to stimulate boards and shareholders to pursue a long-term strategy. Financial stress tests were applied to identify excessive risks to banks. The question remains however whether these changes will successfully prevent short-termism and excessive risk-taking that results from non-transparent corporate governance, and, if not, what else can be done? This central question will be dealt with in the lectures of the course “Corporate Governance after the Financial Crisis” from both economic and legal perspectives.
On Day 1, several theories behind corporate governance are explained. Subsequently, the mechanisms of corporate governance (markets, law and regulation, gatekeepers and watchdogs and self-regulation) will be discussed. Furthermore, the students will be instructed on how to write a paper on a selected, pivotal corporate scandal. The theme of Day 2 is risk management and reporting. During this session the requirements for risk management and the accounting for in the annual report will be assessed, and explained how to report in a sustainable and integrated manner. On Day 3, all participants will go on an excursion to Amsterdam. This starts with a visit to Euronext Amsterdam, the Dutch stock exchange, where you can observe activity on the trading floor during an interactive tour. Later, we will go to Loyens & Loeff, which is one of the most prestigious law firms in the Netherlands, for a lecture about private equity.
During the fourth day, we will focus on supervisory board systems. Specifically, the difference between one tier and two tier systems will be clarified. Hereafter we will enjoy two lectures about executive pay. On the final day we will enjoy a lecture on boardroom dynamics from an experienced former board member, Luigi Pinna. After the participants will present their papers after which the best group will win a prize.
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