MBA Course — Economics, Organizations and Incentives: Applications in governance and ethics

A summary of the course and my take aways

Photo by Artsy Crafty https://stocksnap.io/author/artsandcrafts

This was my best course in the first term! Hands down. Most likely because of the delivery by Professor Rau Raghavendra and the very interesting course content. His classes were engaging and he drove home every point with a combination of cases, class interactions and a dose of humour, every now and then.

I was at dinner some days ago with some friends and while we celebrated the end of the long and intense term, we queried ourselves over the courses and professors we found interesting. Santos, a classmate was quick to say Professor Rau and this Econ course. I corroborated!

By the way, he has a book that briefly introduces Corporate Finance on Amazon. You can get a copy here.

A quick summary of the course is below:

1. Introduction to Economics, Organisations and Incentives

• The characteristics of a corporation
• Problems markets must solve
• How do markets and firms solve the coordination problem
• The shifting nature of firms
• The import of information asymmetry

2. Shareholders vs Stakeholders

In whose interest should the firm be managed? This was interesting!

• Understanding the importance of governance
• Theories and nature of firms
• Legal constraints to corporate governance — Protecting shareholders and stakeholders
• Solutions to the problems of information assymetry

3. Setting incentives

• Structural and incentive constraints
• Dividends & debt policy
• Incentive contracts
• Problem of management discretion

4. Shareholders conflict

• Concentration of ownership (around the world)
• Corporate governance
• Types of family firms
• Principal agent problem — Moral Hazard & Adverse Selection
• Bonuses, Dividends, Restricted Stocks, vesting (cliff & staggered)
• Executive compensation

Additional post-module topics

• The evolution of firms and markets
• Cryptography
• Artificial Intelligence
• Big data
• The dark side of technology

End of

PS; Sourced from the course content produced by the course coordinators with addition from my personal notes