Law and Economics of Corporate Transactions (LECT)
The Law and Economics of Corporate Transactions (LECT) course is the interdisciplinary course that acts as the fulcrum for the entire MLF degree. LECT uses the tools of conventional microeconomic theory (the study of the behaviour and decision-making process of individuals, or individual firms) to help students understand how the legal structure determines the value of corporate transactions. LECT brings together students’ knowledge and the analytical techniques they have developed whilst studying the pure finance and pure law courses on the MLF, to create a single integrated “toolkit” for effectively considering corporate transactions. It does so by taking into account their legal, financial and economic issues and implications. LECT is taught in Hilary and Trinity terms.
- Economic theory of contracting
- Incomplete contracting and uncertainty
- Information costs and adverse selection
- Strategic behaviour
- Agency costs
- Professional ethics
- Hold-up costs
In the third and final term, students have to apply their studies to five well-known, real-life transactions, which is why LECT is often referred to as the “Deals course”. Students split into groups and use the theoretical materials from LECT and their finance courses, as well as what they have studied in their law electives to analyse the legal, financial, and economic issues raised by the transactions. Each group presents its work on a particular transaction to their classmates, Faculty members, and the practitioners who worked on the transaction; then, the practitioners respond to give their views and explain what happened in the real deal.