Finance 434 - Advanced Topics in Corporate Finance

FIN 434 – Fall term 2020

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Finance 434 - Advanced Topics in Corporate Finance

Professor Randall Morck

Office location: Business 4-20G Phone: (780) 492-5683 E-mail: [email protected] Publications: Randall Morck at Google Office hours: Thursday 14:30 to 16:30 open class discussion online (details TBA)

Private zoom meetings (please e-mail to set up a time)

Please e-mail me with questions or concerns. I will try to respond

quickly

Teaching assistants

Cassie Zhang [email protected] Office hours: TBA David Cho [email protected] Office hours TBA

Classes

To accommodate a substantial fraction of students in distant time zones, lectures will be recorded and posted, generally each Tuesday evening, as PowerPoint slideshows with audio explanations of each slide

Please watch them at your convenience

Slideshows will be by topic, rather than of uniform length

Course Materials

There is no textbook. Non-optional (i.e. might be on the exam) readings are all available free

PDFs of almost all of the readings are available free via Google Scholar’s Canadian and American websites, scholar.google.ca and scholar.google.com

Published articles are available free in the University of Alberta Library, via the ABI Inform database. To access the library databases 1. Go to the library’s website: Click Here. 2. Enter either ABI Inform for published articles or NBER for NBER working papers & books 3. Search for the item you want by author or title & follow the links to find the full text as a

PDF file

Prepublication versions of many articles and book chapters are available free via the library’s NBER database or directly via nber.org if you are on-campus or inside the U of A VPN.

Older books are available free at Project Gutenberg at gutenberg.org. Chapters in readings from books published by the University of Chicago Press are available free via the library’s NBER database if you are inside the university’s VPN. Some books listed as optional readings remain under copyright & must be borrowed from the library or purchased.


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Examinations and Grade Calculation

Exams include a midterm (24 hour exam window from 3 PM MDT Oct. 13th to 3 PM MDT Oct. 14th) & a final (24 hour exam window from 3 PM MST Dec. 1st to 3 PM MST Dec. 2nd). You may download the exam, write it, and upload it not more than two hours later during any two-hour period within the exam’s 24 hour exam window. The 24 hour window is to accommodate students in distant time zones.

o Each exam will be available for download as a Word file any time after 3 PM (Edmonton

time) the 1st day of the exam window.

o Completed exams, saved as PDF files, are due not more than 2 hours after the Word file is downloaded and no later than 3 PM the 2nd day (Edmonton time) of the exam window

o Students are expected to know how to

1. Enter answers into (edit) a Word File under each question

2. Save a Word file as a PDF file (using Word’s “save as PDF” option under FILE)

3. Sign and lock a PDF file. This records the time you finished the exam and prevents anyone from making subsequent changes.

o You must work alone; teamwork or plagiarism merits an automatic and irreversible F.

o Exams are open-book. You may refer to lectures, slides, notes, readings, and any other

sources while writing the exam.

o The final will cover the whole course equally, not just post-midterm material.

Your final grade comes from plugging your two test scores into the formula:

𝑐𝑜𝑢𝑟𝑠𝑒 𝑔𝑟𝑎𝑑𝑒 = 𝑚𝑎𝑥 [𝑚𝑖𝑑𝑡𝑒𝑟𝑚 𝑔𝑟𝑎𝑑𝑒 + 𝑓𝑖𝑛𝑎𝑙 𝑔𝑟𝑎𝑑𝑒

2,

𝑓𝑖𝑛𝑎𝑙 𝑔𝑟𝑎𝑑𝑒

]

where 𝑚𝑖𝑑𝑡𝑒𝑟𝑚 𝑔𝑟𝑎𝑑𝑒 is your raw score on the midterm and final grade is adjusted by

applying the linear transformation

𝑓𝑖𝑛𝑎𝑙 𝑔𝑟𝑎𝑑𝑒 = 𝑎 + 𝑏 × 𝑟𝑎𝑤 𝑠𝑐𝑜𝑟𝑒 𝑜𝑛 𝑓𝑖𝑛𝑎𝑙

with a & b chosen so the 𝑓𝑖𝑛𝑎𝑙 𝑔𝑟𝑎𝑑𝑒 distribution has the same mean & standard deviation as the 𝑚𝑖𝑑𝑡𝑒𝑟𝑚 𝑔𝑟𝑎𝑑𝑒 distribution.

The linear transformation adjusts for any difference in difficulty between the two exams.

The formula means doing well on the midterm helps you, but doing badly on the midterm is automatically forgotten totally if you do well on the final.

This formula also makes the midterm optional. Students may opt to skip the midterm and automatically have 100% weight on the final examination.


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Midterm & Final Exams

Prior year midterm & final exams with solutions will be posted the week before each exam.

Any request to revise the grade on the Midterm Exam should be brought to my attention no later than the week after the exam has been returned in class. Any such request should include a written explanation as to why more points are warranted & the exam should be submitted to me. Before writing your request you should read the exam solutions (Exam solutions will be posted on the class website). NOTE: If you submit your exam, I will re-grade your entire exam. As a result you might end up with a grade that is lower than the grade you were initially assigned.

I will follow University regulations regarding absences from exams. Excused absence for a missed exam is not automatic & is granted at the discretion of the instructor (in the case of term exams) or the student’s Faculty (in the case of final exams). Instructors & Faculties are not required to grant excused absences for unacceptable reasons that include, but are not limited to personal events such as vacations, weddings, or travel arrangements. When a student is absent from an exam without acceptable excuse, a final grade will be computed using a raw score of zero for the exam missed. Any student who applies for or obtains an excused absence by making false statements will be liable under the Code of Student Behavior.

To apply for an excused absence a student must first notify me by e-mail within 2 working days of the missed midterm exam or as soon as the student is able having regard to the circumstances underlying the absence. I can ask for supporting documentation pertaining to the absence. Where the reason for the absence is incapacitating illness, a medical note cannot be required. However, if a student has seen a doctor the student may have a medical note to support the request for an excused absence. In the absence of medical note, or where the reason for the absence is something other than illness, Instructors can ask students to visit their Faculty Office & obtain either a Statutory Declaration or a Faculty Form to outline the reasons for the absence.

If you cannot take the Midterm Exam for an approved reason, your grade will be determined by the final examination, which will cover the entire term, not just material after the midterm. If you cannot take the final exam, you must apply to write a deferred exam. For more information on University procedures for applying for deferred final examinations consult the Business Undergraduate Office, or go to

https://business.ualberta.ca/programs/bachelor-of-commerce/current-students/exam-policyprocedures/deferred-exams

University Policy Statement

"The University of Alberta is committed to the highest standards of academic integrity & honesty. Students are expected to be familiar with these standards regarding academic honesty & to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at www.governance.ualberta.ca) & avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence & can result in suspension or expulsion from the University." Policy about course outlines can be found in Course Requirements, Evaluation Procedures & Grading of the University Calendar.

Audio/Visual Policy

Audio or video recording, digital or otherwise, of lectures, labs, seminars or any other teaching environment by students is allowed only with the prior written consent of the instructor or as a part of an approved accommodation plan. Student or instructor content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study & is not to be used or distributed for any other purpose without prior written consent from the content author(s).

Learning Goals & Course Assessment

1. At the end of this course, you will have developed the following course specific skills or knowledge: General understanding of a range of advanced concepts in finance

2. This course incorporates the Learning Goals of the BCom Program, in particular: critical thinking, ethical awareness, global awareness, quantitative skills & written Communications

3. Final grading in this class is done on the basis of individual student achievement of the course & program outcomes. These outcomes are measured by the following assessments:

Midterm: Assesses qualitative & quantitative understanding of concepts in lectures & required readings in first part of course

Final exam: Assesses qualitative & quantitative understanding of concepts in lectures & required readings in entire course, with equal weighting over the entire semester.


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Topics Note: We may cover some topics in parallel in class, even though their readings appear separately below. The order of presentation or content of topics may change to accommodate important current financial events. There may not be sufficient time to cover all the topics in the final parts (Parts V and VI) of the list below.

Part I Corporate Finance & Economic Prosperity

Why Are Some Nations Rich & Others poor?

Optional Readings

Beck, Thorsten & Ross Levine, eds. 2018. Handbook of Finance & Development. Edward Elgar

Deaton, Angus. 2003. Health, inequality & economic development. Journal of Economic Literature 41(1)113-158.

Marx, Karl. 1867. Das Kapital. Esp. Vol. 3

Pinker, Steven. 2012. The better angels of our nature: Why violence has declined. Penguin.

Schumpeter, Joseph. 1911. Theorie der wirtschaftlichen Entwicklung (Translation (1934) as The Theory of Economic Development: An inquiry into profits, capital, credit, interest & the business cycle is still under copyright).

Smith, Adam. 1776. An Inquiry into the Nature & Causes of the Wealth of Nations. Edinburgh.

Finance, Solow Residuals & Creative Destruction

Readings (might be on midterm or final)

King, Robert G & Ross Levine. 1993. Finance & growth: Schumpeter might be right. Quarterly Journal of Economics 108(3) 717-738.

Optional Readings

Aghion, Philippe & Peter Howitt. 1992. A Model of Growth through Creative Destruction. Econometrica 323-351.

Romer, Paul. 1986. Increasing returns & long-run growth. Journal of Political Economy 94(5)1002-37.

Romer, Paul. 1994. The origins of endogenous growth. Journal of Economic Perspectives 8(1)3-22

Solow, Robert. 1956. A contribution to the theory of economic growth. Quarterly Journal of Economics 70(1)65–94.

Solow, Robert. 1957. Technical change & the aggregate production function. Review of Economics & Statistics 3(3)312–320

Intellectual Property Rights & Finance


Boldrin, Michele & David Levine.2013. The case against patents. Journal of Economic Perspectives 27(1)3-22

Optional Readings Hagen, Gregory, Margaret Wilkinson, Teresa Scassa, David Lametti, Cameron Hutchison, & Graham

Reynolds. 2018. Canadian Intellectual Property Law: Cases & Materials, 2nd ed. Emond Montgomery

Heller, Michael. 1998. The tragedy of the anti-commons: Property in the transition from Marx to markets. Harvard Law Review 111(3) 621-688.

Heller, Michael. 2008. The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation & Costs Lives. Basic Books.

Jerrim, John & Lindsey Macmillan. 2015. Income Inequality, Intergenerational Mobility & the Great


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Gatsby Curve: Is Education the Key? Social Forces 94(2)505-533.

Moser, Petra.2013.Patents & Innovation: Evidence from economic history. Journal of Economic Perspectives 27(1)23-44

Posner, Richard. 2000. Intellectual property: The law & economics approach. Journal of Economic Perspectives 19(2) 57-73.

Wu, Tim. 2010. The Master Switch: The Rise & Fall of Information Empires. Vintage Books.

Finance & Political Science


Baumol, William J. 1990. Entrepreneurship: productive, unproductive & destructive. Journal of Political Economy 98 893-921.

Optional Readings

Djankov, Simeon, Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer. 2002. The regulation of entry. Quarterly Journal of Economics 117(1)1-37.

Faccio, Mara, John J. McConnell & Ronald W. Masulis. 2006. Political connections & corporate bailouts. Journal of Finance 61(6)2597-2635.

Faccio, Mara. 2006. Politically connected firms. American Economic Review 96(1)369-386.

Glaezer, Edward & Andrei Shleifer. 2005. The Curley Effect: The economics of shaping the electorate. Journal of Law, Economics & organization 21(1)1-19.

Krueger, Anne. 1974. The political economy of the rent-seeking society. American Economic Review 64 291-303.

Lenway, Stefanie, Morck, Randall & Yeung, Bernard. 1996. Rent-seeking, protectionism & innovation in the American steel industry. Economic Journal. March. 106(435)410-21.

Murphy, Kevin, Andrei Shleifer & Robert W. Vishny. 1991. The allocation of talent: Implications for growth. Quarterly Journal of Economics. May 106(2) 503-30.

Stigler, George. 1971. The theory of economic regulation. Bell Journal of Economics & Management Science 2(2)3-21.

Tullock, Gordon. 1967. The welfare costs of tariffs, monopolies & theft. Western Economic Journal 5 224-232.

Private Property Rights & Finance


Olson, Mancur. 1993. Dictatorship, democracy & development. American Political Science Review 87(3) 567-576.

Optional Readings Beardsley, Kyle, Kristian Skrede Gleditsch & Nigel Lo. 2015. Roving bandits? The geographical evolution of

African armed conflicts. International Studies Quarterly 59(3)503-516.

Buchanan, James & Yong J. Yoon. 2000. Symmetric tragedies: Commons & anti-commons. Journal of Law & Economics 43 1-14.

De Soto, Hernando. 1990. The Other Path: The Economic Answer to Terrorism. Harper.

De Soto, Hernando. 2000. The Mystery of Capital: Why Capitalism Triumphs in the West & Fails Everywhere Else. Basic Books.

Kurrild-Klitgaard, Peter & Gert Tinggaard Svendsen. 2008. Rational bandits: Plunder, public goods & the Vikings. Public Choice 117(3/4)255-272.

La Porta, Rafael & Andrei Shleifer. 2014. Informality & development. Journal of Economic Perspectives 28(3)109-26.


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Libman, Alexander, Vladimir Kozlov & André Schultz. 2012. Roving Bandits in Action: Outside option & governmental predation in autocracies. Kyklos 65(4)526-562.

Nash, John. 1951. Non-cooperative games. Annals of Mathematics 54(2)286-295.

R. H. Coase, Ronald. 1960. The Problem of Social Cost. Journal of Law & Economics 3 1-44. Sanchez de la Sierra, Raul. 2017. On the origin of the state: Stationary bandits & taxation in Eastern Congo.

SSRN 2358701

Xu, L. Colin & Li Yang. 2018. Stationary Bandits, State Capacity & the Malthusian Transition: The Lasting Impact of the Taiping Rebellion. World Bank e-library

Young, Andrew. 2016. What Does It Take for a Roving Bandit Settle Down? Theory & an illustrative history of the Visigoths. Public Choice 168(1/2)75-102.

Institutional Economics & Competitive Pressure for Good Government


Tiebout, Charles. 1956. A pure theory of local expenditures. Journal of Political Economy 64 416-24.

Optional Readings

Banzhaf, Spencer & Randall Walsh. 2008. Do people vote with their feet? An empirical test of Tiebout's mechanism. American Economic Review 98(3)843-863.

Buchanan, James. 1965. An Economic Theory of clubs. Economica 32 1-14.

Cai, Hongbin & Daniel Treisman. 2005. Does competition for capital discipline governments? Decentralization, globalization & public policy. American Economic Review 95(3)817-30.

Dustmann, Christian & Ian P. Preston. 2019. Free Movement, Open Borders & the Global Gains from Labor Mobility. Annual Review of Economics 11, 783-808.

Easterbrook, Frank H. 2009. The race for the bottom in corporate governance. Virginia Law Review (2009): 685-706.

North, Douglass 1991. Institutions. Journal of Economic Perspectives 5(1)97-112.

North, Douglass. 1995. The New Institutional Economics & Third World Development.

Olson, Mancur. 1965. The Logic of Collective Action. Harvard University Press.

Perroni, Carlo & Kimberley A. Scharf. 2001. Tiebout with politics: capital tax competition & constitutional choices. Review of Economic Studies 68(1)133-154.

Sandler, Todd & John Tschirhart. 1997. Club theory: Thirty years later. Public Choice 93, 335–355

Swank, Duane. 2002. Global Capital, Political Institutions & Policy Change in Developed Welfare States. Cambridge University Press.

Taylor, Alison & Jesse Mackay. 2008. Three decades of choice in Edmonton schools. Journal of Education Policy 23(5)549-566. (See also: Clever Rednecks, Economist Sept. 21st 2006)

Williamson, Oliver. 2000. The new institutional economics: taking stock, looking ahead. Journal of Economic Literature 38(3)595-613.

Finance & Ethics


Pinker, Steven. 2011. Decline of violence: Taming the devil within us. Nature 478(7369)309

Optional Readings

Bakan, Joel. 2003. The Corporation. Big Picture Media.

Boddy, Clive. 2011. The corporate psychopaths theory of the global financial crisis. Journal of Business Ethics 102(2)255-259.

Brueckner, Martin. 2013. Corporation as psychopath. Encyclopedia of Corporate Social Responsibility. Springer. 613-618.

Bruni, Luigino & Robert Sugden. 2013. Reclaiming virtue ethics for economics. Journal of Economic


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Perspectives 27(4)141-64.

Dobson, John. 1997. Finance Ethics: The rationality of virtue. Rowman & Littlefield

Evensky, Jerry. 2005. Adam Smith's Theory of Moral Sentiments: On morals & why they matter to a liberal society of free people & free markets. Journal of Economic Perspectives 19(3)109-130.

Frank, Robert., Thomas Gilovich & Dennis Regan. 1993. Does studying economics inhibit cooperation? Journal of Economic Perspectives 7(2)159-171.

Kitzmueller, Markus & Jay Shimshack. 2012. Economic perspectives on corporate social responsibility. Journal of Economic Literature 50(1)51-84.

Klein, Naomi. 2015. This Changes Everything: Capitalism v. the Climate. Simon & Schuster.

Lipman, Victor. 2013. The disturbing link between psychopathy & leadership. Psychology Today

Novak, Michael. 1993. The Catholic ethic & the spirit of capitalism.

Smith, Adam. 1759. The Theory of the Moral Sentiments. Library of Congress archive

Weber, Max. 1905. The Protestant ethic & the spirit of capitalism. Project Gutenberg.

Weber, Max. 1915. The Religion of China, Confucianism & Taoism. Project Gutenberg

Part II Financial Market Inefficiency

Finance Theory & the Wisdom of Crowds


Galton, Francis. 1907. Vox Populi (The wisdom of crowds). Nature 75(7)450-451.

Hayek, Friedrich August. 1945. The use of knowledge in society. American Economic Review.

Optional Readings

Aniket, Kittur & Robert E. Kraut. 2008. Harnessing the wisdom of crowds in Wikipedia. Proceedings of the 2008 ACM conference on Computer supported cooperative work.

Chan, Su-han., John Martin & John Kensinger. 1990. Corporate research & development expenditures & share value. Journal of Financial Economics 26 255-276.

Fama, Eugene. 1970. Efficient capital markets: A review of theory & empirical work. Journal of Finance 25 383–417

Hall, Bronwyn. 1993. Industrial research during the 1980s: Did the rate of return fall? Brookings Papers on Economic Activity 1993(2) 289-343.lucas

Malkiel, Burton. 2003. A Random Walk Down Wall Street. Norton.

McConnell, John & Chris J. Muscarella. 1985. Corporate capital expenditure decisions & the market value of the firm. Journal of Financial Economics. Sept. 14(3) 399 422.

Surowiecki, James 2004. The Wisdom of Crowds: Why the Many Are Smarter Than the Few & How Collective Wisdom Shapes Business, Economies, Societies & Nations .Little, Brown

Financial History & the Madness of Crowds


Mackay, Charles. 1841. Extraordinary Popular Delusions & the Madness of Crowds. Richard Bentley: London (chapters 2, 3 & 4 on Mississippi scheme, South Sea bubble & Tulipmania)

Optional Readings

Balen, Malcolm. 2003. The Secret History of the South Sea Bubble: The World's First Great Financial Scandal. Fourth Estate.

Chopra, Navin, Lee, Charles, Shleifer, Andrei, Thaler, Richard. 1993. Yes, discounts on closed-end funds are a sentiment index. Journal of Finance 48(2) 801-808.

Garber, Peter. 1989. Tulipmania. Journal of Political Economy 97(3) 535-560.


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Lee, Charles, Andrei Shleifer & Richard Thaler. 1991. Investor sentiment & the closed-end fund puzzle. Journal of Finance 46(1)75-110.

Gertler, Mark & Simon Gilchrist. 2018. What happened: Financial factors in the Great Recession? Journal of Economic Perspectives 32(3)3-30.

Goldfarb, Brent & David A. Kirsch. 2019. Bubbles & Crashes: The Boom & Bust of Technological Innovation. Stanford University Press.

Financial Manias, Panics & Crashes


Kindleberger, Charles P. & Robert Z. Aliber. Anatomy of a Typical Crisis. In Manias, Panics & Crashes. pp

21-32. Link (works only if you are on-campus or inside the U of A VPN)

Optional Readings

Diamond, Doug & Philip Dybvig. 1983. Bank runs, deposit insurance & liquidity. Journal of political economy 91(3)401-19.

Bénabou, Roland & Jean Tirole. 2016. Mindful economics: The production, consumption & value of beliefs. Journal of Economic Perspectives 30(3)141-64.

Jung, Jeeman & Robert J Shiller. 2005. Samuelson's Dictum & the Stock Market. Economic Inquiry 43(2) 221-228.

Kindleberger, Charles, Robert Alibur & Robert Solow. 2005. Manias, Panics & Crashes: A History of Financial Crises. Wiley

Lo, Andrew. 2007. The Efficient Markets Hypothesis. In L. Blume, S. Durlauf, eds The New Palgrave: A Dictionary Of Economics, 2nd ed. Palgrave Macmillan.

Minsky, Hyman. 1986. Stabilizing an Unstable Economy. Yale University Press.

Roll, Richard. 1988. R2. Journal of Finance 43(2) 541-566.

Rosenberg, Nathan & Claudio R. Frischtak. 1984. Technological innovation & long waves. Cambridge Journal of Economics 8(1)7-24

Samuelson, Paul. 1998. Summing upon Business Cycles. In Jeffrey Fuhrer & Scott Schuh, eds. Beyond Shocks: What Causes Business Cycles. Federal Reserve Bank of Boston.

Noise Traders


Black, Fischer. 1986. Noise. Journal of Finance 41(3)528-543.

Optional Readings

Grossman, Sanford & Joseph Stiglitz. 1980. On the impossibility of informationally efficient markets. American Economic Review 70(3) 393-408

Grossman, Sanford. 1976. On the efficiency of competitive stock markets where traders have diverse information. Journal of Finance 31(2) 573-585.

Shleifer, Andrei & Lawrence Summers. 1990. The noise trader approach to finance. Journal of Economic Perspectives. Spring.

Stigler, George. 1961. Economics of Information. Journal of Political Economy 69(3)213-25.

Stiglitz, Joseph. 2002. Information & the Change in the Paradigm in Economics. American Economic Review 92(3)460-501.

Psychology and Finance


Frydman, Cary, & Colin Camerer. 2016. The psychology and neuroscience of financial decision


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making. Trends in Cognitive Sciences 20(9)661-75.

Optional Readings

Camerer, Colin, George Loewenstein & Drazen Prelec. 2004. Neuroeconomics: Why economics needs brains. Scandinavian Journal of Economics 106(3)555-79.

Camerer, Colin. 2013. Goals, methods, and progress in neuroeconomics. Annual Review of Economics 5.425-55.

Declerck, Carolyn, Christophe Boone & Griet Emonds. 2013. When do people cooperate? The neuroeconomics of prosocial decision making. Brain and cognition 81(1)95-117.

Fehr, Ernst & Antonio Rangel. 2011. Neuroeconomic Foundations of Economic Choice--Recent Advances. Journal of Economic Perspectives 25(4)3-30.

Glimcher, Paul & Ernst Fehr, eds. 2013. Neuroeconomics: Decision making & the brain. Academic Press.

Glimcher, Paul & Hilke Plassmann. 2017. Lectures in Neuroeconomics. World Scientific.

Kahneman, Daniel. 2011. Thinking, fast and slow. Macmillan

Konovalov, Arkady, and Ian Krajbich. 2019. Over a decade of neuroeconomics: what have we learned? Organizational Research Methods 22(1)148-73.

Loewenstein, George, Scott Rick & Jonathan Cohen. 2008. Neuroeconomics. Annual Review of Psychology 59, 647-72.

Monterosso, John, Payam Piray & Shan Luo. 2012. Neuroeconomics & the study of addiction. Biological Psychiatry 72(2)107-12.

Singer, Tania & Ernst Fehr. 2005. The neuroeconomics of mind reading & empathy. American Economic Review 95(2)340-345.

Smith, Alec, Terry Lohrenz, Justin King, P. Read Montague & Colin F. Camerer. 2014. Irrational exuberance & neural crash warning signals during endogenous experimental market bubbles. Proceedings of the National Academy of Sciences 111(29)10503-8.

Stanton, Angela, Mellani Day & Isabell Welpe, eds. 2010. Neuroeconomics and the Firm. Edward Elgar.

Partially Efficient Markets


Morck, Randall, Bernard Yeung & Wayne Yu. 2013. R2 & the Economy. Annual Review of Financial Economics 5, 143-166

Optional Readings

Chun, Hyunbae, Jung-Wook Kim, Randall Morck & Bernard Yeung. 2008. Creative destruction & firm-specific performance heterogeneity. Journal of Financial Economics, forthcoming.

Durnev, Artyom, Randall Morck, Bernard Yeung & Paul Zarowin. 2003. Does greater firm-specific return variation mean more or less informed stock pricing? Journal of Accounting Research 41(5) 797-836.

Fama, Eugene & Kenneth French. 2004. New lists: Fundamentals & survival rates. Journal of Financial Economics 72, 229-269.

Fernandes, Nuno & Miguel Ferreira. 2008. Does international cross-listing improve the information environment? Journal of Financial Economics 88(2) 216-244.

Fernandes, Nuno & Miguel Ferreira. 2009. Insider trading laws & stock price informativeness. Review of Financial Studies 22(5) 1845-1887.

Ferreira, Miguel & Paul Laux. 2007. Corporate Governance, idiosyncratic risk & information flow. Journal of Finance 62(2) 951-989

Goetzmann, William N., Ning Zhu & Arturo Bris. 2007. Efficiency & the bear: Short sales & markets


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around the world. Journal of Finance 62(3) 1029-79.

Hassan, Tarek & Thomas Mertens. 2017. The Social Cost of Near-Rational Investment. American Economic Review 107(4)1059-103.

Jin, Li & Stewart C. Myers. 2006. R2 around the world: New theory & new tests. Journal of Financial. Economics 79(2) 257–292

Khanna, Tarun & Catherine Thomas. 2009. Synchronicity & firm interlocks in an emerging market. Journal of Financial Economics 92(2) 182-204

Li, Kan, Randall Morck, Fan Yang & Bernard Yeung. 2004. Firm-specific variation & openness in emerging markets. Review of Economics & Statistics 86(3) 658-669.

Morck, Randall, Bernard Yeung & Wayne Yu. 2000. The information content of stock markets: Why do emerging markets have synchronous stock price movements? Journal of Financial Economics 58 215-260.

Xu, Y. & Burton G. Malkiel. 2003. Investigating the behavior of idiosyncratic volatility. Journal of Business 76 613-644.

Speculative Bubbles outside Finance


Willer, Robb, Ko Kuwabara & Michael W. Macy. 2009. The False Enforcement of Unpopular Norms. American Journal of Sociology 115(2)451-90

Optional Reading

Bikhchandani, Sushil, David Hirshleifer & Ivo Welch. 1998. Learning from the Behavior of Others: Conformity, Fads & Informational Cascades. Journal of Economic Perspectives 12(3)151-170

Centola, Damon, Robb Willer & Michael Macy The Emperor’s dilemma: A computational model of self-enforcing norms. American Journal of Sociology 110(4)1009–1040

Crossland, Philip & Faye l. Smith. 2002. Value creation in fine arts: a system dynamics model of inverse demand & information cascades. Strategic Management Journal 23(5)417–434.

Henrich, Joseph; Richard McElreath, Abigail Barr, Jean Ensminger, Clark Barrett, Alexander Bolyanatz, Juan Camilo Cardenas, Michael Gurven, Edwins Gwako, Natalie Henrich, Carolyn Lesorogol, Frank Marlowe, David Tracer & John Ziker 2006. Costly punishment across human societies. Science 312 (5781)1767–1770.

Kuhn, Thomas. 1963. The Function of Dogma in Scientific Research. InA. C. Crombie, ed. Scientific Change. Basic Books, pp. 347–69.

Kuhn, Thomas. 1962. The Structure of Scientific Revolutions. University of Chicago Press.

McCloskey, Deirdre. 1998. The Rhetoric of Economics. University of Wisconsin Press.

Part III Finance & Macroeconomics

Aggregate Investment and the Quality of Firms’ Capital Budgeting


Keynes, John Maynard. 1936. The General Theory of Employment, Interest & Money. Royal Economic Society (chapter 12)

Optional readings

Bernardo, Antonio & Ivo Welch. 2001. On the evolution of overconfidence & entrepreneurs. Journal of Economics & Management Strategy 10:3, 301-330.

Bhattacharya, Sudipto. 1978. Project valuation with mean-reverting cash flow streams. Journal of Finance 33(5) 1317-1331

Bikhchandaqni, Sahil, David Hirschleifer & Ivo Welch. 1992. A theory of fashion, custom & cultural


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change. Journal of Political Economy 100:5, 992-1026.

Blanchard, Olivier, Changyong Rhee & Lawrence Summers. 1993. The stock market, profit & investment. Quarterly Journal of Economics 108 115–136.

Camerer, Colin, Teck-Hua Ho, Juin-Kuan Chong. 2004. A cognitive hierarchy model of games. Quarterly Journal of Economics 119(3)861-898

Harvey, Campbell & John Graham. 2001. The theory & practice of corporate finance: Evidence from the field. Journal of Financial Economics 60 187-243.

Morck, Randall, Eduardo Schwartz & David Stangeland. 1989. The valuation of forestry resources under stochastic prices & inventories. Journal of Financial & Quantitative Analysis 24(4) 473-487.

Measuring Capital Budgeting Quality


Wurgler, Jeffrey. 2000. Financial Markets & the Allocation of Capital. Journal of Financial Economics. 58(1) (Oct.).

Optional readings

Choe, Hyuk, Bong-Chan Kho & René Stulz. 1999. Do foreign investors destabilize stock markets? The Korean experience in 1997. Journal of Financial Economics 54(2) 227-264

Diamond, Douglas & Raghuram G Rajan. 2001 Liquidity risk, liquidity creation & financial fragility: A theory of banking. Journal of Political Economy 109(2) 287-328.

Diamond, Douglas & Raghuram G Rajan. 2002. Bank bailouts & aggregate liquidity. American Economic Review 92(2) 38-42.

Diamond, Douglas & Raghuram G Rajan. 2005. Liquidity shortages & banking crises. Journal of Finance 60(2) 615-647.

Durnev, Artyom, Randall Morck & Bernard Yeung. 2004. Value enhancing capital budgeting & firm-specific stock returns variation. Journal of Finance 59(1)

Leitner. Yaron. 2005. Financial networks: Contagion, commitment & private sector bailouts. Journal of Finance 60(6) 2925-2953

Lee, Dong Wook, Hyun-Han Shin & René M. Stulz. 2018. Does Capital Flow More to High Tobin's Q Industries? NBER working paper.

Animal Spirits in Finance & Macroeconomics

Readings (might be on midterm or final) • Baker, Malcolm & Jeffrey Wurgler. 2007. Investor sentiment in the stock market. Journal of

Economic Perspectives 21(2)129-152.

Optional Reading

Akerlof, George & Robert Shiler. 2009. Animal Spirits – How Human Psychology Drives the Economy & Why It Matters for Global Capitalism. Princeton University Press.

De Bondt, Werner & Richard Thaler. 1985. Does the stock market overreact? Journal of finance 40(3)793-805.

De Grauwe, Paul. 2011. Animal spirits & monetary policy. Economic Theory 47(2/3)423–457.

Duffie, Darrell. 2010. The failure mechanics of dealer banks. Journal of Economic Perspectives 24(1)51

Franke, Reiner. 2012. Microfounded animal spirits in the new macroeconomic consensus. Studies in Nonlinear Dynamics & Econometrics 16(4)72.

Lux, Thomas. 1995. Herd behaviour, bubbles & crashes. Economic Journal 105, 881–889.

Morck, Randall, Andrei Shleifer & Robert Vishny. 1990. The stock market & investment: Is the market a sideshow? Brookings Papers on Economic Activity 1990(2)157-215.


12

Shiller, Robert J. 2017. Narrative economics. American Economic Review 107(4)967-1004.

Finance Foundations of Macroeconomics


Di Guilmi, Corrado. 2017. The Agent‐Based Approach to Post Keynesian Macro‐Modeling. Journal of Economic Surveys 31(5)1183-203.

Optional readings

Ashraf, Quamrul, Boris Gershman & Peter Howitt. 2017. Banks, market organization, and macroeconomic performance: an agent-based computational analysis. Journal of Economic Behavior & Organization 135, 143-80.

Benhabib, Jess & Roger EA Farmer. 1999. Indeterminacy and sunspots in macro-economics. Handbook of Macroeconomics, 387-448.

Bertocco, Giancarlo. 2017. Crisis and the Failure of Economic Theory: The Responsibility of Economists for the Great Recession. Elgar.

Blanchard, Olivier. 2018. On the future of macroeconomic models. Oxford Review of Economic Policy 34(1.2)70–106

Bookstaber, Richard. 2017. The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction. Princeton University Press.

Cochrane, J. H. (2005). Financial markets and the real economy. Foundations and Trends® in Finance, 1(1), 1-101.

Colander, David, Michael Goldberg, Armin Haas, Katarina Juselius, Alan Kirman, Thomas Lux, and Brigitte Sloth. 2009. The financial crisis and the systemic failure of the economics profession. Critical Review 21(2/3)249-267.

Colander, David, Peter Howitt, Alan Kirman, Axel Leijonhufvud, and Perry Mehrling. 2008. Beyond DSGE models: toward an empirically based macroeconomics. American Economic Review 98(2)236-40.

Gualdi, Stanislao & al. 2015. Tipping points in macroeconomic agent-based models. Journal of Economic Dynamics and Control 50, 29-61.

LeBaron, Blake. "Agent-based computational finance." Handbook of computational economics 2 (2006): 1187-1233.

Leijonhufvud, Axel. 2006. Agent-based macro. Handbook of Computational Economics, Vol. 2, 1625-1637.

Russo, Alberto, Luca Riccetti & Mauro Gallegati. 2016. Increasing inequality, consumer credit and financial fragility in an agent based macroeconomic model. Journal of Evolutionary Economics 26(1)25-47

Stiglitz, Joseph. 2018. Where modern macroeconomics went wrong. Oxford Review of Economic Policy 34(1.2)70–106

Woodford, Michael. 1986. Stationary sunspot equilibria in a finance constrained economy. Journal of Economic Theory 40(1)128-37.

Part IV Corporate Governance

Interests, Entrenchment & Corporate Empires


Morck, Randall, Andrei Shleifer & Robert W. Vishny. 1988. Management ownership & market valuation: An empirical analysis. Journal of Financial Economics 20(1,2) 293-315.

Optional Readings

Berle, Adolf & Gardiner Means. 1932. The Modern Corporation & Private Property. Macmillan, New


13

York.

Jensen, Michael & William Meckling. 1976. Theory of the firm: managerial behavior, agency costs & ownership structure. Journal of Financial Economics 3 305–360

Jensen, Michael. 1986. Agency Costs of Free Cash Flow, Corporate Finance & Takeovers. American Economic Review. May. 76(2) 323-30.

Johnson, W. Bruce, Robert P. Magee, Nandu J. Nagarajan & Henry A. Newman. 1985. An analysis of the stock price reaction to sudden executive deaths: Implications for the management labor model. Journal of Accounting & Economics. 7(1-3) April.151-174.

Lang, Larry, Rene Stultz & Ralph Walkling. 1991. A test of the free cash flow hypothesis: The case of bidder returns. Journal of Financial Economics 29 315-35.

Slovin, Myron & Marie Sushka. 1993. Ownership Concentration, corporate-Control Activity & Firm Value - Evidence from the Death of Inside Blockholders. Journal of Finance 48(4) 1293-1321.

Yermack, David. 2006. Flights of fancy: Corporate jets, CEO perquisites & inferior shareholder returns. Journal of Financial Economics 80(1)211-242

Corporate Governance & Behavioral Economics


Morck, Randall. 2008. Behavioral finance in corporate governance: economics & ethics of the devil’s advocate. Journal of Management & Governance 12(2)179-200

Optional Readings

Festinger, Leon. 1957. A Theory of Cognitive Dissonance. Row, Peterson.

Janis, Irving. 1972. Victims of Groupthink. Boston. Houghton Mifflin.

Malmendier, Ulrike & Geoffrey Tate. 2015. Behavioral CEOs: The role of managerial overconfidence. Journal of Economic Perspectives 29(4)37-60.

Galasso, Alberto & Timothy S. Simcoe. 2011. CEO overconfidence & innovation. Management Science 57(8)1469-1484.

Milgram, Stanley. 1974. Obedience to Authority. Harper & Row.

Landier, Augustin, David Sraer & David Thesmar. 2009. Optimal dissent in organizations. Review of

Economic Studies 76(2)761-794.

Corporate Takeovers


Morck, Randall, Andrei Shleifer & Robert W. Vishny. 1989. Alternative mechanisms for corporate control. American Economic Review 79(4) 842-52.

Morck, Randall, Andrei Shleifer & Robert W. Vishny. 1990. Do managerial objectives drive bad acquisitions? Journal of Finance 45(1) 31-48.

Optional Readings

Coase, Ronald. 1937. The nature of the firm. Economica Nov. 386-405.

Grossman, Sanford & Oliver Hart. 1980. Take-over bids, the free rider problem & the theory of the corporation. Bell Journal of Economics 11 42-64.

Jensen, Michael C. 1986. Agency costs of free cash flow, corporate finance & takeovers. American Economic Review 76(2) 323–29.

Lang, Larry & Robert Litzenberger. 1989. Dividend announcements: Cash flow signalling vs. free cash flow hypothesis? Journal of Financial Economics 24(1) 181–92.

Lang, Larry, Stulz, Rene, Walkling, Ralph. 1991. A test of the free cash flow hypothesis: The case of bidder returns. Journal of Financial Economics 29(2) 315-36.


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Lichtenberg, Frank. 1992. Corporate Takeovers & Productivity. MIT Press.

Mitchell, Mark & Kenneth Lehn. 1990. Do bad bidders make good targets? Journal of Political Economy 98 372-398.

Moeller, Sara, Frederik Schlingemann & René Stulz, 2005. Wealth destruction on a massive scale? A study of acquiring-firm returns in the recent merger wave. Journal of Finance 60(2)757-782.

Shleifer, Andrei & Lawrence Summers. 1988. Breach of trust in hostile takeovers. In Allan Auerbach, ed. Corporate Takeovers: Causes & Consequences. University of Chicago Press.

Extreme Leverage: Private Equity, LBOs, Junk Bonds & Bankruptcy Risk


Review (if necessary) your Finance 301 notes on Capital Structure & Bankruptcy Risk

Kaplan, Steven & Per Stromberg. 2008. Leveraged buyouts & private equity. Journal of Economic Perspectives 23(1) 121-146

Optional Readings

Bebchuk, Lucian. 2000. Using options to divide value in corporate bankruptcy. European Economic Review 44 829-843.

Bruck, Connie. The Predators' Ball: The Inside Story of Drexel Burnham & the Rise of the Junk Bond Raiders. Penguin.

Claessens, Stijn & Leora Klapper. 2005. Bankruptcy around the world: Explanations of its relative use. American Law & Economics Review 7(1)253-283.

De Jong, Abe, Rezaul Kabir & Thuy Thu Nguyen. 2008. Capital structure around the world. Journal of Banking & Finance 32(9)1954-69.

Djankov, Simeon, Caralee McLiesh & Andrei Shleifer. 2007. Private credit in 129 countries. Journal of Financial Economics 84(2)299-329.

Djankov, Simeon, Oliver Hart, Caralee McLiesh & Andrei Shleifer. 2008. Debt enforcement around the world. Journal of political Economy 116(6)1105-1149.

Fischel, Daniel. Payback: The Conspiracy to Destroy Michael Milken & His Financial Revolution. Harper Books.

Fisher, Timothy & Jocelyn Martel. 1999. Should we abolish chapter 11? Evidence from Canada. Journal of Legal Studies 28(1)233-257.

Kaplan, Steven & Per Stromberg. 2009. Leveraged buyouts & private equity. Journal of Economic Perspectives 23(1)121-46.

Weiss, Lawrence & Karen Wruck. 1998. Information problems, conflicts of interest & asset stripping: Chapter 11's failure in the case of Eastern Airlines. Journal of Financial Economics 48(1) 55-97.

Yago, Glenn. 1990. Junk Bonds - How High Yield Securities Restructured Corporate America. Oxford University Press.

Takeover Defenses


Shleifer, Andrei & Robert Vishny. 1997. A survey of corporate governance. Journal of Finance 52 737-783.

Optional Readings

Bebchuk, Lucian, Alma Cohen, Allen Ferrell. 2009. What matters in corporate governance? Review of Financial Studies 22(2) 783-827

Bebchuk, Lucien & Allen Ferrell. 1999. Federalism & Corporate Law: The race to protect managers from takeovers. Columbia Law Review 99

Daines, Robert. 2001. Does Delaware law improve firm values? Journal of Financial Economics 62


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Hartzell, Jay, Eli Ofek & David Yermak. 2004. What's In It for Me? CEOs Whose Firms Are Acquired? Review of Financial Studies 17(1)37-61

Karpoff, Jonathan & Paul Malatesta. 1995. State takeover legislation & share values: The wealth effects of Pennsylvania's Act 36. Journal of Corporate Finance 1(3/4)367-382.

Souther, Matthew. 2016. The effects of takeover defenses: Evidence from closed-end funds. Journal of Financial Economics 119(2)420-440.

Shareholder Democracy


Gompers, Paul, Joy Ishii & Andrew Metrick. 2003. Corporate governance & equity prices. Quarterly Journal of Economics 118 107-55.

Optional Readings

Bebchuk, Lucien & Alma Cohen. 2003. Firms' decisions where to incorporate. Journal of Law & Economics 46 383-425.

Bebchuk, Lucien & Alma Cohen. 2005. The costs of entrenched boards. Journal of Financial Economics 78 409-433.

Bebchuk, Lucien & Jesse Fried. 2004. Pay without Performance: The Unfulfilled Promise of Executive Compensation. Harvard University Press.

Bebchuk, Lucien, Yaniv Grinstein & Urs Peyer. 2006. Lucky CEOs. Harvard Law School Olin Discussion Paper No. 566.

Bebchuk, Lucien. 2007. The myth of the shareholder franchise. Virginia Law Review 93 675-732.

Del Guercio, Diane, Laura Seery & Tracie Woidtk. 2008. Do boards pay attention when institutional investor activists just vote no? Journal of Financial Economics 90(1)84-103

PART V Comparative & Global Corporate Finance & Governance

Financial Globalization


Morck, Randall & Bernard Yeung. 1991. Why investors value multinationality. Journal of Business 64(2) 165-87.

Optional Readings

Bekaert, Geert, Campbell R. Harvey & Christian Lundblad. 2005. Does financial liberalization spur growth? Journal of Financial Economics 77 3-55.

Gumpert, Anna, James R. Hines Jr & Monika Schnitzer. Multinational firms & tax havens. Review of Economics & Statistics 98.4 (2016): 713-727.

Harris, David, Randall Morck, Joel Slemrod & Bernard Yeung. 1993. Income shifting in U.S. multinational corporations. In J. Slemrod et al., eds. International Aspects of Taxation. University of Chicago Press.

Henry, Peter Blair. 2000. Do stock market liberalizations cause investment booms? Journal of Financial Economics 58(1/2) 301

Henry, Peter Blair. 2000. Stock market liberalization, economic reform & emerging market equity prices. Journal of Finance 55(2) 529-564.

Henry, Peter Blair. 2003. Capital-account liberalization, the cost of capital & economic growth. American Economic Review 93(2) 91-96.

Mendoza, Enrique G. & Vincenzo Quadrini. 2010. Financial globalization, financial crises & contagion. Journal of Monetary Economics 57(1)24-39.


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Palan, Ronen, Richard Murphy & Christian Chavagneux. 2013. Tax Havens: How Globalization Really Works. Cornell University Press.

Stulz, René M. 2005. The limits of financial globalization. Journal of Finance 60(4)1595-1638.

Zucman, Gabriel. 2015. The Hidden Wealth of Nations: The Scourge of Tax Havens. University of Chicago Press.

Comparative Corporate Governance


Morck, Randall & Bernard Yeung. 2009. Never waste a good crisis: An historical perspective on comparative corporate governance. Annual Review of Financial Economics 1, 145-179.

Optional Readings

Dyck, Alexander & Luigi Zingales. 2004. Private benefits of control: An international comparison. Journal of Finance 59(2)537-600.

La Porta, Rafael, Florencio Lopez‐de‐Silanes & Andrei Shleifer. 1999. Corporate ownership around the world. Journal of Finance 54(2)471-517.

La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer & Robert Vishny. 2000. Agency problems & dividend policies around the world. Journal of Finance 55 1-33.

Morck, Randall & Lloyd Steier. 2005. The global history of corporate governance: An introduction. In Randall Morck, ed. A History of Corporate Governance around the World: Family Business Groups to Professional Managers. University of Chicago Press. 1-64.

Morck, Randall, Daniel Wolfenzon & Bernard Yeung. 2005. Corporate governance, economic entrenchment & growth. Journal of Economic Literature. Also NBER working paper 10692

Nenova, Tatiana. 2003. The value of corporate voting rights & control: A cross-country analysis. Journal of Financial Economics 68(3)325-351.

What’s Unique about Corporate Governance in Canada?


Doidge, Craig, Alexander Dyck, Hamed Mahmudi & Aazam Virani. 2019. Collective action and governance activism. Review of Finance 23 (5), 893-933

Optional Readings

Arbour, Pierre. 1993. Quebec Inc. & the Temptation of State Capitalism. Robert Davies.

Black, Bernard & John Coffee. 1997. Hail Britannia? Institutional investor behavior under limited regulation. Michigan Law Review 92(7) 1997-2087.

Bris. Arturo. 2005. Do insider trading laws work? European Financial Management 11(3) 267-312

Eckbo, Espen. 1986. Mergers & the market for corporate control: The Canadian evidence. Canadian Journal of Economics 19 236-260.

Gompers, Paul & Andrew Metrick. 2001. Institutional investors & equity prices. Quarterly Journal of Economics 114 229-260.

Khorana, Ajay, Henri Servaes & Peter Tufano. Mutual fund fees around the world. Review of Financial Studies 22(3) 1279-1310

Lakonishok, Josef, Andrei Shleifer, Richard Thaler & Robert Vishny. 1991. Window dressing by pension fund managers. American Economic Review 81(2) 227-231.

Lakonishok, Josef, Andrei Shleifer, Richard Thaler & Robert Vishny. 1992. The structure & performance of the money management industry. Brookings Papers on Economic Activity 1992(1) 339-391.

Morck, Randall, Michael Percy, Gloria Y. Tian & Bernard Yeung. 2005. The rise & fall of the widely held firm: A history of corporate ownership in Canada. In Randall Morck, ed. A History of Corporate


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Governance around the World: Family Business Groups to Professional Managers. University of Chicago Press. 65-140. Also available as a NBER working paper.

Morck, Randall, David Stangeland & Bernard Yeung. 2000. Inherited wealth, corporate control & economic growth: The Canadian disease. In R. Morck, ed. Concentrated Corporate Ownership. University of Chicago Press.

Romano, Roberta. 1995. The politics of public pension funds. The Public Interest 119 42 53.

Smith, Brian & Amoako-Adu, Ben. 1999. Management succession & financial performance of family controlled firms. Journal of Corporate Finance 5(4) 341-368

Smith, Brian & Ben Amoako-Adu. 1995. Relative prices of dual class shares. Journal of Financial & Quantitative Analysis 30(2)223-239.

Anglo-American Corporate Governance, Widely Held Firms & the Common Law


Morck, Randall. 2005. How to eliminate pyramidal business groups: The double-taxation of intercorporate dividends & other incisive uses of tax policy. Tax Policy & the Economy 19 135-179.

Optional readings

Glaezer, Edward & Andrei Shleifer. 2002. Legal Origins. Quarterly Journal of Economics 117(4) 1193-1250.

La Porta, Rafael, Florencio Lopez-de-Salinas, Andrei Shleifer & Robert Vishny. 1997. Legal determinants of external finance. Journal of Finance. July, 52(3) 1131 1150

La Porta, Rafael, Florencio Lopez-de-Salinas, Andrei Shleifer & Robert Vishny 1998. Law & finance. Journal of Political Economy. Dec 106(6) 1113-57.

La Porta, Rafael, Florencio Lopez-de-Silanes & Andrei Shleifer 2006. What works in securities laws. Journal of Finance 61 1-32.

La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer & Robert Vishny. 2000. Investor protection & corporate governance. Journal of Financial Economics 58: 3-27.

La Porta, Rafael, Florencio Lopez-De-Silanes, Andrei Shleifer, Robert Vishny. 2002. Investor protection & corporate valuation. Journal of Finance 57(3) 1147-1170.

La Porta, Rafael, Florencio Lopez-de-Silanes, Cristian Pop-Eleches, Andrei Shleifer. 2004. Judicial checks & balances. Journal of Political Economy 112(2) 445-470.

Levine, Ross, Asli Demirguc-Kunt & Thorsten Beck. 2003. Law & finance: Why does legal origin matter? Journal of Comparative Economics 31(4) 653-676.

Mahoney, Paul. 2001. The common law & economic growth: Hayek might be right. Journal of Legal Studies 30, 503.

Posner, Richard. 1996. Law & Legal Theory in England & America. Oxford Clarendon Press.

France


Kramarz, Francis & David Thesmar. 2013. Social networks in the boardroom. Journal of the European Economic Association 11(4)780-807.

Optional readings

Bertrand, Marianne, Francis Kramarz, Antoinette Schoar & David Thesmar. The Cost of Political Connections. Review of Finance 22 (3)849-876

Ekelund, Robert Burton & Robert D. Tollison. 1981. Mercantilism as a rent-seeking society: Economic regulation in historical perspective. Texas A & M University Press

Ekelund, Robert Burton. 1997. Politicized economies: Monarchy, monopoly & mercantilism. Texas A & M University Press


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Murphy, Antoin. 2005. Corporate ownership in France: The importance of history. In Randall Morck, ed. A History of Corporate Governance around the World: Family Business Groups to Professional Managers. University of Chicago Press, 185 – 222.

Smith, Timothy. 2004. France in Crisis: Welfare, Inequality & Globalization since 1980. Cambridge University Press.

Sraer, David & David Thesmar. 2007. Performance & behavior of family firms: Evidence from the French stock market. Journal of the European Economic Association 5(4)709-751.

Germany


Fohlin, Caroline. 2005. The history of corporate ownership & control in Germany. In Randall Morck, ed. A History of Corporate Governance around the World: Family Business Groups to Professional Managers. University of Chicago Press, 223 – 282.

Optional readings

Baums, Theodor. 1996. Universal banks & investment companies in Germany. In Anthony Saunders & Ingo Walter, eds. Universal Banking: Financial System Design Reconsidered. Irwin, 124-160.

Beck, Thorsten & Ross Levine. 2002. Industry growth & capital allocation: Does having a market- or bank-based system matter? Journal of Financial Economics 64(2) 147-180.

Drucker, Peter. 2017. The pension Fund Revolution. Routledge.

Faleye, Olubunmi, Vikas Mehrotra & Randall Morck. 2006. When labor has a voice in corporate governance. Journal of Financial & Quantitative Analysis 41 489-510

Jensen, Michael & William Meckling. 1979. Rights & production functions: An application to labor-managed firms & co-determination. Journal of Business 52 469-506.

Mehrotra, Vikas & Randall Morck. 2018. Governance & Stakeholders. In Benjamin Hermalin & Michael Weisbach, eds. Elsevier Handbook of the Economics of Corporate Governance. North Holland – also NBER working paper 23460.

Weitz, John. 1997. Hitler's Banker: Hjalmar Horace Greeley Schacht. Little Brown.

Scandinavia


• Thomsen, Steen & Caspar Rose. 2004. Foundation ownership & financial performance: Do companies need owners? European Journal of Law & Economics 18(3)343-364

Optional readings

Adams, Renée B., Matti Keloharju & Samuli Knüpfer. 2017. Are CEOs born leaders? Lessons from traits of a million individuals. European Corporate Governance Institute (ECGI) - Finance Working Paper No. 478/2016.

Cronqvist, Henrik & Mattias Nilsson. 2003. Agency costs of controlling minority shareholders. Journal of Financial & Quantitative analysis 38(2)695-719.

Cronqvist, Henrik, Fredrik Heyman, Mattias Nilsson, Helena Svaleryd & Jonas Vlachos. 2009. Do entrenched managers pay their workers more? Journal of Finance 64(1)309-339.

Högfeldt, Peter. 2005. The history & politics of corporate ownership in Sweden. In Randall Morck, ed. A History of Corporate Governance around the World: Family Business Groups to Professional Managers. University of Chicago Press, 517 – 580.

Kleven, Henrik Jacobsen. 2014. How can Scandinavians tax so much? Journal of Economic Perspectives 28(4)77-98.

Rich Asian Economies


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Morck, Randall & Masao Nakamura. 2018. Japan's ultimately unaccursed natural resources-financed

industrialization. Journal of the Japanese & International Economies 47(1)32-54.

Optional readings

Beason, Dick & Dennis Patrick Patterson. 2004. The Japan That Never Was: Explaining the Rise & Decline of a Misunderstood Country. State University of New York Press.

Beason, Richard & David E. Weinstein. 1996. Growth, economies of scale & targeting in Japan (1955-1990). Review of Economics & Statistics. May 78(2) 286-96.

Chia, Siow Yue. The Singapore model of industrial policy: past evolution & current thinking. Inter-American Development Bank, 2005.

Morck, Randall & Bernard Yeung. 2018. East Asian Financial Development. In Thorsten Beck & Ross Levin, eds. Handbook of Finance & Development, Edward Elgar, forthcoming.

Morck, Randall & Masao Nakamura. 1999. Banks & corporate control in Japan. Journal of Finance 54(1) 319-40.

Morck, Randall & Masao Nakamura. 2005. A frog in a well knows nothing of the ocean: A history of corporate ownership in Japan. In Randall Morck, ed. A History of Corporate Governance around the World: Family Business Groups to Professional Managers. University of Chicago Press. 367-459. Link:

Morck, Randall & Masao Nakamura. 2007. Business groups & the Big Push: Meiji Japan's mass privatization & subsequent growth. Enterprise & Society 8(3) 543-601.

Corporatism


Morck, Randall & Bernard Yeung. 2010. Corporatism & the ghost of the Third Way. Capitalism & Society 5(3)a2

Optional readings

Aganin, Alexander & Paolo Volpin. 2005. The history of corporate ownership in Italy. In Randall Morck, ed. A History of Corporate Governance around the World: Family Business Groups to Professional Managers. University of Chicago Press, 325 – 366.

Bruton, Henry. 1998. A reconsideration of import substitution. Journal of Economic Literature 36(2)903-936.

Murphy, Kevin, Andrei Shleifer & Robert Vishny. 1989. Industrialization & the Big Push. Journal of Political Economy 97 1003-1026.

Mussolini, Benito. 1932. The Doctrine of Fascism Enciclopedia Italiana.

Ogilvie, Sheilagh. 2014. The economics of guilds. Journal of Economic Perspectives 28(4) 169-92.

Prebisch, Raúl. 1950. The Economic Development of Latin America & Its Principal Problems. United Nations Press.

Quadragesimo Anno: encyclical of Pope Pius XI on reconstruction of the social order

Rerum Novarum: encyclical of Pope Leo XIII on capital & labor

Rodrik, Dani. 2008. One Economics, Many Recipes: Globalization, Institutions & Economic Growth. Princeton University Press.

Rosenstein-Rodan, Paul. 1943. Problems of industrialization of Eastern & South- Eastern Europe. Economic Journal 53(210/211) 202-11.

Rostow, Walt Whitman. 1960. The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge University Press.


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Finance under & after Socialism


Fan, Joseph, Randall Morck & Bernard Yeung. 2012. Translating Market Socialism with Chinese Characteristics into sustained prosperity, chapter 1 in Joseph Fan & Randall Morck, eds. Capitalizing China. University of Chicago Press. Also NBER working paper 17687.

Optional readings

Fan, Joseph & Randall Morck, eds. Capitalizing China. University of Chicago Press. All other chapters.

Fan, Joseph PH, Jun Huang, Randall Morck & Bernard Yeung. 2017. Institutional determinants of vertical integration in China. Journal of Corporate Finance 44(2)524-539.

Holmes, Leslie. 2009. Communism: A Very Short Introduction. Oxford University Press

McGregor, Richard. 2010. The Party: The Secret World of China's Communist Rulers. Harper Collins

Morck, Randall & Bernard Yeung. 2016. China in Asia. China Economic Review 40(1)297-308

Morck, Randall & Bernard Yeung. 2016. Corporate Governance & the Finance Sector: An Asian Perspective. Macroeconomic Review 15(1)97-110.

Ortmann, Stephan. 2013. The Beijing consensus & the Singapore model: unmasking the myth of an alternative authoritarian state-capitalist model. China's Economic Dynamics. Routledge. 97-120.

VI. Unsolved Problems

Optional readings

Fukuyama, Francis. 2006. The end of history & the last man. Simon & Schuster.

Kraakman, Reinier & Henry Hansmann. 2017. The end of history for corporate law. Corporate Governance. Gower

McCloskey, Deirdre. 2019. Fukuyama Was Correct: Liberalism Is the Telos of History. Working paper

Mehrotra, Vikas & Randall Morck. 2017. Governance & stakeholders. Handbook of the Economics of Corporate Governance, Vol. 1. North-Holland, 637-683. Equivalent content available as NBER working paper 23460.

Morck, Randall. 1995. The Great Experiment, Intelligentsia of China 2, 36-41

Pinker, Steven. 2018. Enlightenment now: The case for reason, science, humanism & progress. Penguin.

Tobin, James. 1984. On the efficiency of the financial-system. Lloyds Bank Annual Review 153(July)1-15

Zingales, Luigi. 2015. Presidential address: Does finance benefit society? Journal of Finance 70(4)1327-1363

Finance 434 - Advanced Topics in Corporate Finance

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