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Corporate Governance and Accounting [AIM 6377 – 501]
Thursday, 7:00 PM – 9:45 PM Spring Semester 2006 Classroom: SOM 2.902

Instructor: Constantine Konstans, Ph.D., CPA, CMA, CIA, CFE Professor of Accounting and Information Management Executive Director, Institute for Excellence in Corporate Governance Office: SOM 2.403 Telephone: 972-883-6345 FAX: 972-883-5968 E-mail: Web site: konstans Office hours: By appointment COURSE OBJECTIVES and DESCRIPTION Corporate Governance is the structured system of policies and processes established and maintained by a board of directors to oversee an organization’s strategic activities and resulting performance. The system is in place to ensure proper accountability, probity and openness in the conduct of an organization’s business for the long-term benefit of its shareholders. As such, Corporate Governance focuses on and effectuates the relationships among a company’s board of directors, top management, investors (particularly institutional investors), and various other stakeholders. In essence, Corporate Governance “…is concerned with holding the balance between economic and social goals and between individual and communal goals. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society" (Sir Adrian Cadbury in ‘Global Corporate Governance Forum’, World Bank, 2000). Corporate Governance encompasses such matters as:
1. 2. 3. 4.

Board size, structure, membership, member nomination, election and tenure Committee structure and the nature, composition, and duties of the individual committees Rights, responsibilities and relationship of directors, management, and shareholders Policies/procedures relating to accounting, auditing, executive compensation and financial reporting

Weak Corporate Governance practices may result in financial reporting lacking transparency and clarity, thus not reflecting economic reality. Such conditions have resulted in the enactment of legislation such as Sarbanes-Oxley. To help your understanding of the underlying dynamics of such conditions, this course offers two themes: first, it addresses the relationships and responsibilities among the board of directors, senior officers, investors, and other stakeholders such as external auditors, internal auditors, financial analysts, attorneys, and regulators. Emphasis is on issues relating to the history of Corporate Governance especially in response to significant events affecting the integrity of the global capital markets and resulting in new legislation and/or regulatory requirements. The second theme will feature speakers intimately involved in various aspects of Corporate Governance. Their presentations will provide students with insights on how legislation and regulatory requirements have affected the duties of C-level officers, corporate legal counselors, external auditors, internal auditors, directors, risk management specialists, institutional investors, etc.

Additional factors to be considered are: 1. 2. 3. 4. 5. Identifying the key constituents involved in Corporate Governance Considering the regulatory climate for listed companies Understanding the global dimensions of Corporate Governance Investigating and evaluating research related to Corporate Governance Evaluating selected court cases dealing with the liability of accountants as well as legal sanctions leveled at directors and officers of corporations involved in notorious financial scandals

COURSE PREREQUISITE The course is designed for MBA/MS students who have completed Accounting for Managers (AIM 6305) or its equivalent. TEXTS (and their abbreviations) “M&M” CORPORATE GOVERNANCE Third Edition. Blackwell Publishing, 2004, by Robert A. G. Monks and Nell Minow. COURSE PREPARATION AND PARTICIPATION Each student must accept the responsibility for course preparation. Thus, for each session, every student must study the assigned readings. In addition, each student is expected to participate actively in classroom discussions. GRADING CRITERIA Team paper on a Corporate Governance topic Individual paper on a Corporate Governance topic Individual class participation Possible Points

100 100 50 250

Translation of the total point score into a letter grade will be based on the instructor’s judgment. The letter grade will reflect each student's performance relative to the course and standards expected of MBA students. NOTICE OF UTD POLICY ON SCHOLASTIC DISHONESTY Students are expected to be above reproach in all scholastic activities. Students who engage in scholastic dishonesty are subject to disciplinary penalties, including the possibility of failure in the course and dismissal from the University. “Scholastic dishonesty includes but is not limited to cheating, plagiarism, collusion, the submission for credit of any work or materials that are attributable in whole or in part to another person, taking an examination for another person, any act designed to give unfair advantage to a or the attempt to commit such acts.” (Regents’ Rules and Regulations, Part One, Chapter VI, Section 3, Subsection 3.2, Subdivision 3.22. This policy will be strictly enforced.

DATE 1/12 Week 1 1/19 Week 2 1/26 Week 3 2/2 Week 4 2/9 Week 5

TOPIC Introduction to Course; Team Assignments; Project Assignments Overview of Capitalism, Free Enterprise, and Governmental Regulations The Nature of Corporate Governance Corporate Governance -- Major Players: Shareholders (Institutional and Individual) Corporate Governance -- Major Players: Directors (Selection, Independence, Responsibilities, Liability, Compensation, etc.) Corporate Governance -- Major Players: Management Board Committee Structure, Charters, and Best Practices; Influence of the Major Stock Exchanges Board Relationships with Various Constituents to Include: Management, Legal Counsel (External/Internal), Insurers, Compensation Consultants, Auditors (External/Internal), et al Preparation for and Conduct of a Board Meeting Evolution of the Corporate Regulatory Environment from the Securities Acts of 1933 and 1934 to the Present; Contemporary Regulatory Entities Affecting Corporate Governance Practices Sarbanes-Oxley Legislation (Especially Rules 302 and 404) Rules of NYSE and NASDAQ Case Studies: Enron; Adelphia Key Court Cases Affecting Accountants Case Studies: Arthur Andersen; Waste Management Corp.; WorldCom (MCI) Case Studies: Coca Cola; Compaq; Tyco

RESPONSIBILITY* Dr. Konstans Dr. Konstans Guest Lecturer: TBA Dr. Konstans Guest Lecturer: TBA Dr. Konstans Guest Lecturer: TBA Dr. Konstans Guest Lecturer: TBA


Chapter 1 Chapter 1 Chapter 2 Chapter 3

2/16 Week 6 2/23 Week 7 3/2 Week 8

Dr. Konstans Guest Lecturer: TBA Dr. Konstans Guest Lecturer: TBA Dr. Konstans Guest Lecturer: TBA

Chapter 4 Chapter 4 Chapter 4

3/16 Week 9 3/23 Week 10

Dr. Konstans Guest Lecturer: TBA Dr. Konstans Guest Lecturer: TBA

Chapter 4 Chapter 5

3/30 Week 11

Dr. Konstans Guest Lecturer: TBA

Chapter 6

4/6 Dr. Konstans Chapter Week 12 Guest Lecturer: TBA 6 4/13 Dr. Konstans Chapter Week 13 Guest Lecturer: TBA 6 4/20 Dr. Konstans Chapter Week 14 Guest Lecturer: TBA 6 4/27 Individual Paper Due – Extended Report on Important Corporate Governance-Related Week 15 Issues such as Director Independence, Board-Management Relationships, Legal Obligations of Directors; Institutional Investor Activism, Board Effectiveness Rating Systems, Corporate Social Responsibility, etc. Team Project Presentations – Critiques of Corporate Governance-Related Research on Topics such as: Executive Compensation, Director Independence; Firm Performance • TBA=Speaker list is tentative depending on travel schedules, etc. (These presentations will not always “line up” with the topic for the evening because of scheduling difficulties

Important, Time-Sensitive Requirement Note: Study teams will be formed immediately. To facilitate the process, please send me an email, with the subject “AIM 6377”, containing the information shown below. 1. 2. 3. 4. 5. 6. 7. Last Name; First Name; UTD Degree Program and Expected Graduation Semester Day-Time Telephone Number and FAX Number; Day and Evening e-Mail Addresses Collegiate Degree(s) Earned; Year(s) Earned; Name(s) of the Granting Institution(s) Number of Earned Collegiate Semester Hours of Accounting; Where Earned (Institution) Name of Current Employer; Your Position or Title; Months with Employer Short Summary of Prior Business Experience with Most Recent Experience First A Short Statement of Your Career Objectives and How You Expect This Course to Help