4408109: C15 Corporate Governance and Ethics

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Semester:WS 17/18
Scheduled in semester:3
Semester Hours per Week / Contact Hours:56.0 L / 42.0 h
Self-directed study time:138.0 h

Module coordination/Lecturers


Master's degree programme in Finance (01.09.2015)


Ethics Essentials:

  • Theory, Principles, and World-Views
  • The Ethical Leader: Self-Mastery and Ethics, Mind-Sets
  • Corporate Ethics: Shared Values, Professionalism (as part of Standards of Professional Conduct)
  • CFA Institute Code of Ethics and Standards of Professional Conduct
  • GARP Ethics and Code of Conduct

The course in Corporate Governance covers:

  • Role and Responsibility of Owners
  • Practice of Right of Control for Various Actors
  • The Problem of Free Riding
  • Major Investors
  • Conflicts of Interest Between Financiers
  • Conflicts of Interest Between Stakeholders
  • Financial Remuneration of Managers
  • Alternative Designs for Option-Based Remuneration Structures for Managers
  • Role and Responsibility of Institutions (Accounting, State)
  • Corporate Governance in Financial Services Undertakings
  • Optimal Design for Corporate Governance
  • Empirical Investigations of Corporate Governance
  • The role of Risk Management in Corporate Governance

Learning Outcomes


  • Understanding the origins, discipline and business case of ethics
  • Discussing defined moments such as ethical dilemma in the corporate context
  • Familiarizing with the standards of professionalism in particular

Corporate Governance:


  • illustrate the role and responsibility of corporate owners
  • explain the right of corporate control
  • describe the problem of free riding
  • identify the special characteristic of major investors
  • describe conflicts of interest
  • scrutinise methods of remuneration of managers
  • describe and critically evaluate differing designs for option-based remuneration structures regarding their effect
  • demonstrate the role and responsibility of the board of directors, a company’s audit committee and the state
  • explain the special characteristics of Corporate Governance in the undertakings of financial services
  • develop optimal Corporate Governance structures
  • contrast empirical investigations of Corporate Governance
  • compare and contrast best practices in corporate governance with those of risk management
  • evaluate the relationship between a firm’s risk appetite and its business strategy
  • distinguish the different mechanisms for transmitting risk governance throughout an organization
  • illustrate the interdependence of functional units within a firm as it relates to risk management


Lectures Method

Interactive lecture with discussion, cases.


Required reading in Ethics:

  • Boatright, J.R. (2014). Ethics in Finance, 2nd edition. London: Wiley-Blackwell.
  • CFA Standards of Practice Handbook (11th ed.) (effective 1 July 2014) [http://www.cfapubs.org/toc/ccb/2014/2014/4]
  • GARP (2010). Code of Conduct, revised edition.

Required reading in Corporate Governance:

  • Brinsley, N. (2006). Executive Stock Options: Early Exercise Provisions and Risk-taking Incentives. The Journal of Finance, 61(5), 2487–2509.
  • Crouhy, M., Galai, D., & Mark, R. (2014). The Essentials of Risk Management (2nd ed.). New York: McGraw-Hill. [Chapter 4]
  • Dittmann, I. & Maug, E. (2007). Lower Salaries and no Options: The optimal Structure of Executive Pay. The Journal of Finance, 62(1), 303-343.
  • Hall, B. J., & Murphy, K.J. (2003). The Trouble With Stock Options. Journal of Economic Perspectives, 17(3), 49-70.
  • Hall, B. J., & Murphy, K. J. (2002). Stock options for undiversified executives. Journal of Accounting and Economics, 33(1), 3-42.
  • Monks, R.A.G., & Minow, N. (2011). Corporate Governance (5th ed.). Chichester: Wiley.
  • Rezaee, Z. (2008). Corporate Governance and Ethics. London: Wiley.


Lecture slides will be available on Moodle

Exam Modalities

See lectures within the module.