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Corporate Governance: Agency Problems & Ethics

Watch our interview with Academic Programme Director Professor Raghavendra Rau.

Overview

In the last few years an increasing number of scandals (options backdating, insider trading, LIBOR rate setting, excessive pay for no apparent performance) have dominated the financial press. This has led to an increase in demand for stringent rules to bind executives including caps on pay, clawbacks, and fines, and an increased emphasis on ethical standards, including requesting bankers to sign an oath.

The purpose of this course is to provide an analytical framework based on contracting theory and asymmetric information to think about corporate governance and business ethics. This approach differs from defining ethical behaviour as complying with a number of subjective definitions of what is "good" or "bad".

The contractual approach argues that a firm should be considered as a nexus of contracts between various stakeholders. Conflicts between stakeholders can be controlled to some extent by explicit contracts, e.g. incentive pay to reduce conflicts between managers and shareholders. However, explicit contracts cannot be written for each potential conflict of interest. This creates a need for respecting implicit contracts, which we will define as business ethics. So corporate governance, in a broad sense, involves specifying the balance between explicit as well as implicit contracts in a firm. We will illustrate this novel way of thinking about ethics with case studies where board members, bankers and other financial service providers have to think about what implicit and explicit contracts govern the relations with the various stakeholders.

Topics covered include:

  • How should firms be run?
  • What is corporate governance and what is best practice?
  • Agency problems and solutions: conflicts between managers and shareholders, between shareholders and bondholders and between different types of shareholders
  • Incentive issues: setting managerial compensation
  • Board structure

This programme can be taken on its own or together with five others as a consolidated series. On completion of all six programmes, participants receive the Cambridge Judge Business School Financial Management Certificate of Achievement. On completing the FMCA you will be eligible to become an associate member of Cambridge Judge Business School's global network of graduates and business-focused University of Cambridge alumni, faculty and staff.

Benefits

  • Use a comprehensive framework to analyse any kind of financial situation

This programme counts as one course for those completing the Cambridge Judge Business School General Management Certificate of Achievement or Cambridge Judge Business School Financial Management Certificate of Achievement. On completing either the GMCA or FMCA you will be eligible to become an associate member of Cambridge Judge Business School's global network of graduates and business-focused University of Cambridge alumni, faculty and staff.

Who should attend

This programme is suitable for middle-level and senior executives who are familiar with established valuation techniques and financial contracts, but who are interested in understanding more about how these may be modified in a changing landscape of increased scrutiny.

Faculty & speakers

Raghavendra Rau

Sir Evelyn de Rothschild Professor of Finance
PhD (INSEAD)

Read more

Dates & fees

Dates Duration Fees *
25-26 May 2017 2 days £2300 + VAT

VAT is charged at the prevailing rate, which is currently 20%; e.g. £2,300 + 20% = £2,760.

* Fees include instruction, materials, lunch and breaks. Preferential rates may be available for groups, University of Cambridge alumni and members of the School's Alumni Association. Please note prices pre-registration are subject to change.

This programme forms part of the Cambridge Judge Business School Financial Management Certificate of Achievement. For participants completing all six finance programmes required, the overall fee is £9,975 + VAT.

On completing the FMCA you will be eligible to become an associate member of Cambridge Judge Business School's global network of graduates and business-focused University of Cambridge alumni, faculty and staff.

For information regarding payment terms, cancellation rights, transfer policies and fees, please see our terms & conditions documents:

Terms & Conditions for Self-funded Applicants (pdf, 226KB) (updated 27 October 2015)
Terms & Conditions for Organisation-funded Applicants (pdf, 243KB) (updated 27 October 2015)

Registration closes at midday two working days before the programme start date.

Participants are expected to attend the full programme.

Version 2.1 (5 February 2016)

Register

You can register for this programme via our online system. Please note the registration form will open in a new tab/window.

When you register for this programme, please let us know if your organisation is paying for your placement or if you are applying as an individual.

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I would recommend this programme as it provides the perfect combination of both practical and theoretical methods with real life examples. Professor Rau did a wonderful job, providing us with strategic problem solving and decision making tips and understandings. He could explain the complex issues, methods very easily and intelligibly. As an analyst with a quantitative background, it was particularly refreshing to take part in a non-quantitative course – it opened my eyes to a new perspective of processes and issues that are part of an extraordinarily complex system.
Derya Guler, Actuarial Analyst, Conquaestor