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Looking for a class that doesn’t require too many bid points, but can predict the future? Well, look no further than “Corporate Governance”, the double-listed Management and Finance division course, taught by Professor Frank Edwards. The course is a recent addition to the School’s elective offerings and has already developed a popular following among students. With readings from sources such as the book: “The Smartest Guys in the Room”, the front page of The New York Times and The Wall Street Journal, and decisions from the Delaware Chancery Court, it combines recent events with the history and theory behind the case law that forms today’s corporate governance rules.
So how is the class connected to predicting the future? Fall semester students in Corporate Governance got a taste of “déjà vu all over again” last week in reading the NYT and WSJ headlines about two young Goldman Sachs and Merrill Lynch analysts’ insider trading scheme to use advance copies of the Business Week column “Inside Wall Street” (bought from a magazine printer) to get a jump on the rest of the market. What was so uncanny about this? The final exam last fall in Corporate Governance began with the question: “Assume you are an employee of Business Week magazine, which publishes a column called “Inside Wall Street available to the public every Thursday at 5:00 p.m. which recommends stocks to buy ….you decide to buy the recommended stocks on Thursday morning that are listed in the column and sell those stocks a few days later. Are you guilty of securities fraud?” While most students got the answer to this question right, it is exactly these real-world situations that the course prepares students for.
The recent spate of corporate scandals that have struck corporations in the US and overseas, and the hope that Columbia’s MBAs might avoid these embarrassing pitfalls, serves as Professor Edwards’ prime motivation for creating this elective. According to Edwards, it is “essential for students to understand what their obligations are as managers and how they need to conduct themselves in the business world.” The course aims to arm students with an understanding of their legal responsibilities and a sensible code of conduct when doing business. “I wanted to make the course more interdisciplinary, combining aspects of law, economics, finance and management – whatever is appropriate to the problem.” An important component of the course, according to Professor Edwards, is the emphasis on good processes for making business decisions that are in the best interests of the corporation and its shareholders. The course examines why governance processes are important and what constitutes good processes.
If the most recent insider trading scandal is any indication, Professor Edwards’ course plays a significant role in helping to prepare students for the real world ethical and legal dilemmas they will face in business.