Postgraduate Course: Corporation Law and Economics (LAWS11284)
Course Outline
| School | School of Law |
College | College of Humanities and Social Science |
| Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Not available to visiting students |
| SCQF Credits | 20 |
ECTS Credits | 10 |
| Summary | The activity of business organisations cannot be fully understood without a firm grasp of the economic rationales that underpin the internal structure of such organisations and the transactions they engage in. Meaningful corporate law scholarship and practice must be informed by economic analysis.
Throughout this course, students will acquire comprehensive knowledge and understanding of the principal theories, principles and concepts that underlie the law and economics analysis of corporations. Upon successful completion of this course, students will acquire an inter-disciplinary understanding of the relations among corporate constituencies and the economic incentives that trigger various business transactions.
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| Course description |
Postgraduate taught course.
This course is mandatory for the completion of the LLM in Corporate Law.
The course is available to students from other LLM programmes, subject to place availability.
Participants in this course will examine the following core topics:
1. critical assumptions of law and economics theory
1.1 the principle of wealth maximisation (content; criticism)
1.2 the principle of rational choice (content; caveats)
2. economic theories of the corporation
2.1 Coase's theory: the firm as organizational coordination of resources by command
2.2 the Berle-Dodd debate: corporate managers as trustees
2.3 Alchian and Demsetz: the firm as a voluntary coordination mechanism
2.4 Jensen and Meckling: the firm as a nexus of contracts
2.5 Easterbrook and Fischel: hypothetical bargaining and default rules
3. law and economics of shareholders' rights
3.1 the economic rationale of limited liability (limited liability as a device to reduce the costs of separation between ownership and control; limited liability and the firm's cost of capital; limited liability and the externalisation of risk)
3.2 the right to vote (voting as an aspect of contracting; voting as part of risk bearing; proxy rules)
4. law and economics of directors' duties
4.1 fiduciary duties (default rules that regulate divergence of interests between principal and agent; efficient alternative to elaborate promises and extra-monitoring)
4.2 the duty of care and the business judgment rule (different attitudes towards risk among corporate constituencies; trade-off between the need to encourage optimal risk-taking and the need to ensure a minimum standard of professionalism; business judgment rule as procedural review of managerial decisions)
5. law and economics of corporate control transactions
5.1 economic reasons for acquisitions (creation of value by: displacing inefficient managers, operating synergies, redress of hold-up costs, diversification, etc)
5.2 acquisition techniques: negotiated acquisitions (mechanics by which the transaction takes place; the duties of management in selecting and negotiating with the bidder; competing bidders); hostile acquisitions (defence measures used by targets; bidder's options to defeat those defences)
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Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
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Co-requisites | |
| Prohibited Combinations | |
Other requirements | None |
Course Delivery Information
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| Academic year 2014/15, Not available to visiting students (SS1)
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Quota: 25 |
| Course Start |
Semester 1 |
Timetable |
Timetable |
| Learning and Teaching activities (Further Info) |
Total Hours:
200
(
Seminar/Tutorial Hours 20,
Programme Level Learning and Teaching Hours 4,
Directed Learning and Independent Learning Hours
176 )
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| Assessment (Further Info) |
Written Exam
0 %,
Coursework
100 %,
Practical Exam
0 %
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| Additional Information (Assessment) |
75% final written essay
25% oral student presentation
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| Feedback |
Not entered |
| No Exam Information |
Learning Outcomes
On completion of this course, the student will be able to:
- By the end of the course, students will be able to:
Demonstrate a critical understanding of the content and implications of the main economic theories of the corporation:
o understand the differences in terminology and methods between legal and economic theories of the firm
o summarize and critically analyse the main arguments put forward in support of, and against, the reification of the corporation
o analyse the relation between theories of the firm and corporate governance
o appraise the influence of the agency model of the firm on the US corporate governance rules
o compare and contrast the legal and the economic meaning of 'contracting' and 'agency relation'
- Demonstrate extensive and critical knowledge and understanding of the economic rationale behind several key corporate law features:
o analyse the benefits that limited liability creates for shareholders and contrast them to the costs borne by voluntary and involuntary creditors;
o critically evaluate the contractual nature of fiduciary duties
o demonstrate a critical understanding of the economic reasons behind friendly and hostile takeovers
- Demonstrate development of key research, communication and personal effectiveness skills:
o the ability to synthesise and communicate information and ideas effectively in written and oral form
o the ability to present to others research and scholarly work relating to their own and foreign legal cultures
o the ability to work independently, seeking relevant advice and support when necessary
o the ability to work constructively as a member of a group or team, to assert leadership or follow instructions effectively
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Additional Information
| Graduate Attributes and Skills |
Research skills
Oral and written communication skills
Problem-solving and critical analysis skills
Team work skills
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| Keywords | Economic theories of the firm; law and economics; company law |
Contacts
| Course organiser | Mr Remus Valsan
Tel: (0131 6)50 2008
Email: Remus.Valsan@ed.ac.uk |
Course secretary | Miss Amanda Mackenzie
Tel: (0131 6)50 6325
Email: amanda.mackenzie@ed.ac.uk |
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© Copyright 2014 The University of Edinburgh - 12 January 2015 4:17 am
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