The Corporate Governance Game: The Case of the United States

This is a role-playing exercise in which students self-discover some of the major conflicts of interest inherent in the corporation. These include conflicts of interest among shareholders, executive management, directors and auditors. Students are then able to analyze and determine their own logical solutions to address these conflicts. They may be surprised to learn that many of their own solutions are embedded as significant components of best practices in corporate governance today. Students are subsequently exposed to the existing corporate governance legislation in the United States and are able to critically assess its strengths and weaknesses. In addition, an example of a corporate scandal serves to illustrate the enormous potential cost and negative impact of ineffective corporate governance practices. Through this exercise, finance students can also be introduced to the concepts of agency theory, market efficiency, and the relation between risk and required return.