CSR Information Per Finance Course
(Browse the responses for each course below)
“Global Issues” broadly defined, I use investing in international context (as in portfolio diversification) as a key example and application throughout the course, with a particular attention to handling investing in currencies. In terms of hands-on learning, the course is designed around combining everything taught in a class to applying it to a hypothetical problem (recommend a portfolio allocation for an endowment).
International Study Trip includes the aspects of the understanding of international business, the responsibility of the U.S. as it relates to the rest of the world. This includes the responsibility of the U.S. multi-national corporations overseas as well as the U.S. itself. IST covers global issues by providing a framework for students to understand how businesses work in other parts of the world. That is, other cultures and countries have different perspectives of how to do business. It covers business ethics as it relates to how U.S. businesses operate overseas as well as how national businesses operate in individual countries. Diversity is covered in the framework of international culture. That is, each country has a different culture and a different interaction format. By being immersed in other cultures, students learn how to work in a diverse environment.
The international study trip is a fully hands-on class where students set up meetings, organize the trip, and learn about how to do international business in a very hands-on basis.
In the class on real options, we discuss how energy policy uncertainty might make it difficult for private companies to commit to renewable energy. We discuss international venture capital and global research and development in 2 of the 10 classes. Topics include: How entrepreneurial ecosystem, investment exit conditions, and legal and institutional infrastructure vary in different countries and how these variations affect ease of doing venture capital investments in those countries; off-shoring of research and development by U.S. companies; growth and investment opportunities in emerging markets. We also cover how to calculate cost of capital for international investments.
We discuss how the rule of law and prevalence of corruption affect effectiveness of doing investments in non-U.S. countries. We also discuss how managers of venture capital funds should make investment decisions that are positive-net present value for their investors (limited partners or LPs) as opposed to being positive-net present value for themselves.
When introducing shareholder wealth maximization as the objective of the corporation, I discuss alternative views (e.g., stakeholder maximization). I also have extensive discussions regarding the importance of reputation capital. The first Harvard Business School case deals with compliance with the Clean Air Act. One key issue is whether the company should pursue the lowest cost compliance mechanism or if there are other considerations that should be considered before deciding. Regarding global issues, the main way in which I currently address this is from a portfolio optimization perspective, where investment in foreign markets is a key source of diversification.
I have students break into groups to tackle problems during class time. Examples include: creating a well-diversified portfolio from a set of asset class returns and covariance matrix; calculating the net present value of a project proposal; and calculating an appropriate discount rate for capital budgeting purposes for a company.
I cover forecasting GDP growth rates and measuring the degree of financial integration in a variety of developed and emerging markets. I also cover several firms managed by women and minorities.
Three class sessions have significant coverage of cost management topics associated with environmental issues such as: lifecycle costing, supply chain cost management for reverse supply chain logistics, product design for low total cost of ownership (including post use disposal), and the model of tradeoffs associated with prevention spending, compliance spending and costs of noncompliance/polluting. We also discuss at some length how public policy decisions about taxing, capping, or creating a market for pollution, affect the above decision models.
In regards to corporate social responsibility, the primary aspect that we consider is the management of human capital and the costing issues that surround the full costs of employees including benefits and pension costs. We explore some of the unique features of labor as a productive input — as compared to material and capital. We also consider how public policies related to national healthcare and insurance markets influences firms’ cost management practices. I do not teach ethics per se; however, we do distinguish between unethical and ethical management of costs as distinct from varying, but equally ethical, management approaches.
Students are placed in teams to complete two field-based projects. One project requires them to analyze the process flows and cost structure of a restaurant of their choosing. A second project requires them to analyze the total cost of ownership of meeting a significant consumer need (i.e., transportation, lodging, fitness) for one of their team members and to consider entrepreneurial solutions for reducing the total cost of ownership in a profitable venture. We devote half of one class to student presentations and discussion of the completed projects and half of the teams present each of the projects (this is somewhat sensitive to class size).