BE877-7-SP-CO:
Markets, Governance and Ethics
2022/23
Essex Business School
Colchester Campus
Spring
Postgraduate: Level 7
Current
Monday 16 January 2023
Friday 24 March 2023
10
22 November 2022
Requisites for this module
(none)
(none)
(none)
(none)
(none)
MBA N20012 The Essex MBA,
MBA N200JS The Essex MBA,
MBA N20E24 The Essex MBA,
MBA N20E36 The Essex MBA,
MBA N20EJS The Essex MBA
The module covers two important aspects of organisations: the economics of corporate architectures as well as their governance and control. We apply economic-contracting and transactions-cost approaches to the study of these two aspects of organising.
Though the range of questions that can be covered is broad, we focus on three topical ones: Can we design the contracts of employees, managers, shareholders and bondholders to reduce the disparate tensions that are forever threatening to pull an organization apart without straight jacketing them? Are expansion phases merely manifestations of empire-building by top managers or offer real gains in innovation and in human capital? Can we discourage excessive risk taking while ensuring suitable risks are not avoided? These merely serve to illustrate but three of a myriad of tradeoffs that managers of successful organizations need to make: concepts and tools from economics can provide one guide, and we study these guides.
Organisations operate amongst rules, norms and habits that expose their structures to inertia. Corporate architecture is an umbrella term for all these forces. The architecture provides guidance, at the same time as imposing restrictions, on how the corporation can be governed. The primary focus, of this course, is on applying the concepts, tools and methods developed within economics towards the coordination and administration of an organisation's activities. You need to reflect on whether these perspectives from economics help organisations to be properly governed.
The three-part approach to the economic analysis of architecture is: first, decide who should decide, second, decide the rewards for deciding 'well' and third, decide who has decided 'well'. Determining what it means to decide 'well' requires agreement on the objective of corporations. I will assume the agreed objective is to maximise the value to the shareholders of the corporation. Nevertheless, deciding a suitable objective for an organisation is a role for political economy and then for corporate law, which brings us naturally to the second important aspect we shall cover - systems of corporate governance.
The notion of governance and control in an organisation is best illustrated by an array of events that occur infrequently in the life of organisations but with large consequences when they do. The topics cover the entire cycle from birth to death. Events such as incorporating a firm (birth), an entrepreneur seeking external capital from banks or venture capitalists (growth), conducting an initial public request for resources and listing on public exchanges (premier league), engaging in mergers and acquisitions (expansion), performing restructuring activities (redirection), and experiencing distress or even ending it all, via liquidation (death). We study the latter three in this module and examine them from the perspectives of contracts and transactions costs.
Sustainable enterprises need to balance risks and returns and choose appropriate trade-offs carefully and corporate governance is a means to achieve a balance between risk levels and return that is sustainable for the organisation and society more broadly. The central question of corporate governance is: In whose interests should a corporation be run? We examine the main corporate governance systems prevalent globally so as to study the different balances between risk and return that underlie them and how these systems differently spread the risk among corporate stakeholders.
BE877
This module addresses key principles of economics, and how they are applied in contemporary organisations. Managers need to be aware of, and be able to critically evaluate, basic economic concepts such as, supply and demand in markets, market structure, marginal and opportunity costs of organising within a firm, and explain the role of agency and information asymmetry in the transaction cost approach to understanding the coordination and administration of organised activities. The module has a two-fold aim:
1. Assess the perspectives of contracting (explicit, implicit or incomplete), agency costs and asymmetric information, which are core devices developed in economics, that help garner insights into important resource choices confronting senior managers so as to suitably govern their organizations.
2. The larger framework within which these choices are embedded is the corporate governance system and it is the second aim to describe the macroeconomic context and political economy perspective associated with the risk distributions among stakeholders of corporations.
The course has four outcomes.
1. Employ economic concepts to assess the conflicts of interest inherent in markets and corporations and explain how, in resolving such conflicts, the administration that minimises transactions costs gains competitive advantage.
2. Understand the control mechanisms that can reduce conflicts of interest and explain the complementarities among these mechanisms.
3. Develop a thorough understanding of the concepts of agency and signalling, as well as explain how these two concepts help analyse important events in corporate governance and control, such as executive compensation, mergers and acquisitions, reorganisations and liquidations.
4. Develop an understanding of the different macroeconomic and associated corporate governance systems prevalent globally and the political economy associated with the different risk distributions among the stakeholders in these broad macroeconomic settings.
Skills for Your Professional Life (Transferable Skills)
EBS Skills & Mapping into Domains
Case discussions and class activities will help develop the following transferable skills:
I. Critical thinking skills that help in making financial and economic decisions.
II. Intra-personal and inter-personal communication skills - through discussion of cases and
presentations during class.
III. Identify relevant information from cases, investment reports and macroeconomic data.
IV. Interpret micro- and macro-economic information for decision-making.
Skill Domain Mapping
Analytical Domain
Academic and Cognitive Skills
A1 Synthesis and bringing together concepts and ideas
A2 Critical thinking
A3 Evaluation of evidence
A4 Creative problem solving
A5 Recognise rival conceptual ideas
Data Analysis Skills
D1 Analysing quantitative data
D2 Analysing qualitative data
D3 Analysing financial data
D5 Analysis of different business reports
Personal Effectiveness Domain
Communication Skills
C1 Writing a business report
C3 Expressing ideas for business purposes
Professional Practice Domain
Business Management Skills
BM3 Ability to develop greater sensitivity and awareness around implied and explicit ethical
assumptions and beliefs
Economics Skills
E1 Understand & apply key concepts and methodologies used to explain the behaviour,
functioning and structure of markets and participants, as well as the political economy and legal
jurisdiction within which the markets are embedded.
There are recorded and live teaching sessions. There are four recorded sessions, and they cover the foundation and technical material you need to understand to make best use of the main teaching sessions. These recorded sessions are a combination of readings, videos, lecture notes and quizzes, and are available on the Moodle page of the module. In the main teaching week, there are eight teaching sessions on every weekday except Wednesday. Teaching starts at 0900 each day and lasts till 1700, with breaks in between obviously. Overall, you should budget for 100 hours in total to the module. Of this total, the preparation and main sessions together comprise 44 hours. The remaining 56 hours are an estimate of the additional hours of your own time (typically spread over two weeks). The lectures and discussion of cases during the main teaching week comprise 28 hours, while 16 hours are for the recorded sessions and its associated readings and quizzes. The main teaching is distributed over four weekdays in one week.
The preparatory sessions involve material for you to work through at your own pace but need to be completed AHEAD of the live sessions. Your answers to the quizzes and activities for these important preparatory sessions are recorded and while not formally assessed, they allow you and me the opportunity to observe your effort on reading papers and preparing notes.
The lecture content is described in this outline. In general, you are expected to do some (by no means all) relevant reading and preparation before the associated lecture. While we cover relevant material in class, it is strongly recommended, however, that these should not be the only times you encounter the material. More material than needed to understand the lectures is included in the teaching programme. This larger set of papers, listed on Moodle, will be useful to prepare for the essay. Furthermore, textbooks are listed in the textbook section and give you different styles of explanation; should one not gel, try the others. The two main textbooks are BSZ and MR, covering similar material, while Cs relates to structure of legal jurisdictions and MM to corporate governance. As you will come to realise, several modules are, of course, inter-related. This module is related
mainly to strategy and marketing, partly to human resources and minimally to accounting and finance. I will highlight some interfaces as we proceed. I would like you to engage with the issues rather than get engrossed in detail that quantitative aspects seek merely to illustrate. Marks are awarded mainly for comprehending and being able to convey concepts and issues aptly and not
merely for correct computations. You may be called to present case précis in class. I will allocate you to groups and, though such presentations are not formally assessed, you will find, nonetheless, that an absence of satisfactory participation in these presentations can result in lesser than desirable performance on the module. Being able to critique an issue, rather than accept the status quo that is taught, is prized above all.
This module does not appear to have a published bibliography for this year.
Assessment items, weightings and deadlines
| Coursework / exam |
Description |
Deadline |
Coursework weighting |
| Coursework |
In-class test |
|
50% |
| Coursework |
Individual Essay |
|
50% |
Additional coursework information
EBS Skills & Mapping into Domains
Case discussions and class activities will help develop the following transferable skills:
I. Critical thinking skills that help in making financial and economic decisions.
II. Intra-personal and inter-personal communication skills - through discussion of cases and presentations during class.
III. Identify relevant information from cases, investment reports and macroeconomic data.
IV. Interpret micro- and macro-economic information for decision-making.
Skill Domain Mapping
Analytical Domain
Academic and Cognitive Skills
A1 Synthesis and bringing together concepts and ideas
A2 Critical thinking
A3 Evaluation of evidence
A4 Creative problem solving
A5 Recognise rival conceptual ideas
Data Analysis Skills
D1 Analysing quantitative data
D2 Analysing qualitative data
D3 Analysing financial data
D5 Analysis of different business reports
Personal Effectiveness Domain
Communication Skills
C1 Writing a business report
C3 Expressing ideas for business purposes
Professional Practice Domain
Business Management Skills
BM3 Ability to develop greater sensitivity and awareness around implied and explicit ethical assumptions and beliefs
Economics Skills
E1 Understand & apply key concepts and methodologies used to explain the behaviour, functioning and structure of markets and participants, as well as the political economy and legal jurisdiction within which the markets are embedded
Exam format definitions
- Remote, open book: Your exam will take place remotely via an online learning platform. You may refer to any physical or electronic materials during the exam.
- In-person, open book: Your exam will take place on campus under invigilation. You may refer to any physical materials such as paper study notes or a textbook during the exam. Electronic devices may not be used in the exam.
- In-person, open book (restricted): The exam will take place on campus under invigilation. You may refer only to specific physical materials such as a named textbook during the exam. Permitted materials will be specified by your department. Electronic devices may not be used in the exam.
- In-person, closed book: The exam will take place on campus under invigilation. You may not refer to any physical materials or electronic devices during the exam. There may be times when a paper dictionary,
for example, may be permitted in an otherwise closed book exam. Any exceptions will be specified by your department.
Your department will provide further guidance before your exams.
Overall assessment
Reassessment
Module supervisor and teaching staff
Dr Hardy Thomas, email: hardt@essex.ac.uk.
Dr Hardy Thomas
mba@essex.ac.uk
No
No
No
Dr Bidit Dey
Brunel University London
Senior Lecturer
Dr Jose Eduardo Ibarra-Olivo
Henley Business School
Lecturer in International Business and Strategy
Available via Moodle
Of 60 hours, 58 (96.7%) hours available to students:
0 hours not recorded due to service coverage or fault;
2 hours not recorded due to opt-out by lecturer(s), module, or event type.
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