DECO 25A39 - Corporate governance and contract theory

Firms are faced with informational and cognitive problems that threaten their efficiency and even their survival. The objective of this course is to show how contract and governance structures can answer these problems. We will explain how corporate firms, in their various forms, can be analyzed as networks of property rights; we will show how their different organizational designs can be explained by knowledge and information constraints. We will then analyze, through theoretical models (incentives, screening, signalling, etc.) and case studies (CEOs’ remunerations), the way in which asymmetries of both information and knowledge have led to specific modes of executive governance and compensation.

Knowledge of these mathematical tools:

• partial derivatives
• optimization techniques

No AI use.

Three assessments (in class)

• Midterm test 40%
• Final exam 50%
• Participation grade 10%