What You Will Learn!
- You will learn what conflicts of interests are
- You will learn how to allign interests of shareholders and debtholders
- You will get more insights into management compensation
- You will learn how the market for corporate control can reduce agency problems
- You will learn how companies use their communication strategy to align interests
- You will learn, as a case study, how private equity investors reduce agency problems
Description
This course makes students familiar with agency problems of equity (i.e. conflicts of interest between shareholders and insider managers) as well as agency problems of debt (i.e. conflicts of interest between stockholders and bondholders). Not only the problems are highlighted but also useful solutions to circumvent these conflicts of interests. Hence, the lecturer discusses management compensation tools, such as employee stock options. This course also includes a few case studies highlighting how listed firms report to their shareholders thereby indicating that they do not have any conflicts of interest. As agency problems are only one type of firm theories, the course further focusses on other theories of the firm, such as the stewardship theory and the prospect theory. Finally, a deep dive is done in the private equity industry. There, private equity investors often syndicate (i.e. a group of private equity investors) but the lead financier needs to structure the syndicate in such a manner that conflicts of interests are minimised. This can be done by taking a higher equity stake in order to reduce moral hazard problems but also to signal the quality of the target firm (i.e. an adverse selection problem). If this is done properly, the impact on target performance is beneficial.
Who Should Attend!
- This course is for everybody (from beginner to expert).
