Session 4: More on corporate governance

The objective function matters, and there are no perfect objectives. That is the message of this class. Once you have absorbed that, I am willing to accept the fact that you still don't quite buy into the "maximize value" objective. That is fine and I would like you to keep thinking about a better alternative with three caveats. First, you cannot cop out and give me multiple objectives - I too would like to maximize stockholder wealth, maximize customer satisfaction, maximize social welfare and employee benefits at the same time but it is just not doable. Second, your objective function has to be measurable. In other words, if you define your objective as maximizing the social good, how would you measure social good? Third, take your objective (and the measurement device you have developed) and ask yourself a cynical question: How might managers game this system for maximum benefit, while hurting you as an owner? In the long term, you may almost guarantee that this will happen.
Slides: www.stern.nyu....
Post class test: www.stern.nyu....
Post class test solution: www.stern.nyu....

[@entaditorium]

Until 2:24pm Pacific Time (Now) i used to think ESG was good. Waiting to take another dump on ESG come Monday. This lecture was quite enlightening! Thanks professor for uploading the videos....

[@safetyfirst2417]

It is good for some industries. ESG is helping mining &metals, oil&gas to avoid major disasters with severe business implementations (like recent Vale tailings dam collapse). Also, audited ESG performance will decrease cost of debt significantly for those industries. EBRD, IFC and other fancy lenders love ESG. If for example miners have those lenders in their portfolios it will make permitting and licencing issues go much easier in most jurisdictions.

[@zeze9062]

class starts at 2:43

[@ahjussi]

thank you for the upload!

[@thijsvn8127]

Thanks for the upload!

[@santyv9466]

Professor thanks for the session. I couldn't download or play video podcast for any of the corp finance sessions. Looks like a glitch at your end.

[@adityaswami1986]

1:02:11 ~ "god help you if you call in a consultant"

[@marcwhite6267]

The classes are online again?

[@zeze9062]

it's class 2022

[@gursahejkhurana7594]

2:28