跨国财务管理11章fhjy.pptx

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1、11.Itcanbewell-knownthateconomicintegrationsweepsallovertheworld,corporateinternationalizationistheforegoneconclusionofeconomicintegration.2.Howcanyougetajobinthepreviouscorporations?2CourseMaterialsEunandResnick,2010,International Financial Management,ChinaMachinePress,5thEdition(4rdEditionOK)Resou

2、rcesandReadingsinInternationalFinance:InternationalFinanceResources:YahooFinanceReadingsinInternationalFinance:TheEconomist3CourseObjectiveIt is anewfieldof modern times corporation financial management.Toprovideaframeworkformakingcorporatefinancialdecisionsinaninternationalcontext.4GlobalizationFor

3、eignInvestmentDecisionsInternationalCapitalBudgetingSourcingCapitalinGlobalMarketsMultinationalCashManagementSynthesisCourseOverview5RequirementsandGradingClassparticipationandCases(20%)FinalExam(80%)6Chapter1Globalization&theMultinationalFirmChapterobjectives:Understandwhyitisimportanttostudyintern

4、ationalfinance.Distinguishinternationalfinancefromdomesticfinance.7Whatsmultinationalfinance？WhatsSpecialaboutmultinationalFinance?Whydoweneedtostudyfinancialmanagementofmultinationalfirm?GoalsforInternationalFinancialManagementGlobalizationoftheWorldEconomyMultinationalCorporationsOutline8KeywordsF

5、oreignexchangeriskPoliticalriskMarketimperfectionExpandedopportunitysetMultinationalcorporation(MNC)外汇风险外汇风险政治风险政治风险市场不完善市场不完善跨国公司跨国公司扩大的市场机遇扩大的市场机遇91.Whatsmultinationalfinance？Financialmanagementismainlyconcernedwithhowtooptimallymakevariouscorporatefinancialdecisions,suchasthosepertainingtoinvestm

6、ent,financing,dividendpolicy,andworkingcapitalmanagement,withaviewtoachievingasetofgivencorporateobjectives.Multinationalfinanceisconcernedwithfinancialmanagementinaninternationalsetting.102.WhatsSpecialaboutmultinationalFinance?2.1ForeignExchangeRiskTheriskthatforeigncurrencyprofitsmayevaporateindo

7、llartermsduetounanticipatedunfavorableexchangeratemovements.Suppose$1=100andyoubuy10sharesofToyotaat1,000pershare.Oneyearlatertheinvestmentisworthtenpercentmoreinyen:11,000But,iftheyenhasdepreciatedto$1=120,yourinvestmenthasactuallylostmoneyindollarterms.112.2PoliticalRiskPoliticalriskrangesfromunex

8、pectedchangesintaxrulestooutrightexpropriationofassetsheldbyforeigners.Sovereigngovernmentshavetherighttoregulatethemovementofgoods,capital,andpeopleacrosstheirborders.Theselawssometimeschangeinunexpectedways.WhatsSpecialaboutmultinationalFinance?12WhatsSpecialaboutInternationalFinance?2.3MarketImpe

9、rfections Legalrestrictionsonmovementofgoods,people,andmoneyTransactionscostsShippingcostsDiscriminationtaxationMarketImperfectionsrepresentvariousfrictionandimpedimentspreventingmarketsfromfunctioningperfectly.TheExampleofNestlsMarketImperfectionlNestl used to issue two different classes of common

10、stock bearer shares and registered shares.nForeignerswereonlyallowedtobuybearershares.nSwisscitizenscouldbuyregisteredshares.nThebearerstockwasmoreexpensive.lOn November 18,1988,Nestl lifted restrictions imposed on foreigners,allowing them to hold registered shares as well as bearer shares.NestlsFor

11、eignOwnershipRestrictions12,00010,0008,0006,0004,0002,000011203191824Source:Financial Times,November 26,1988 p.1.Adapted with permission.SFBearer shareRegistered shareTheExampleofNestlsMarketImperfectionlFollowingthis,thepricespreadbetweenthetwotypesofsharesnarroweddramatically.nThisimpliesthatthere

12、wasamajortransferofwealthfromforeignshareholderstoSwissshareholders.lForeignersholdingNestlbearershareswereexposedtopoliticalriskinacountrythatiswidelyviewedasahavenfromsuchrisk.lTheNestlepisodeillustratesboththeimportanceofconsideringmarketimperfectionsandtheperilofpoliticalrisk.162.4ExpandedOpport

13、unitySet Whenfirmsorindividualinvestorsventureintothearenaofglobalmarkets,theycanbenefitfromanexpandedopportunityset.Firmscanlocateproductioninanycountryorregionoftheworldtomaximizetheirperformanceandraisefundsinanycapitalmarketwherethecostofcapitalisthelowest.Inaddition,firmscangainfromgreaterecono

14、miesofscalewhentheirtangibleandintangibleassetsaredeployedonaglobalbasis.WhatsSpecialaboutmultinationalFinance?173.Whydoweneedtostudyfinancialmanagementofmultinationalfirm?Highlyglobalizedandintegratedworldeconomy.ConsumptionProductionInvestmentItisthusessentialforfinancialmanagerstofullyunderstandv

15、italinternationaldimensionsoffinancialmanagement.18AmericanconsumersimportoilSaudiArabiaTVsetsJapanautomobilesGermanygarmentsChinashoesIndonesiapastaItalywineFranceexportaircraft,software,movies,jeans,wheat,andotherproducts19Production Nike,aU.S.-basedcompanywithagloballyrecognizedbrandname,manufact

16、uresathleticshoesinsuchAsiandevelopingcountriesasChina,Indonesia,andVietnamusingsubcontractors,andsellstheproductsintheU.S.andforeignmarkets.ThecompanyhasnoproductionfacilitiesintheUnitedStates.Inaword,MNCsrelentlesseffortstosourceinputsandlocateproductionanywhereintheworldwherecostsarelowerandprofi

17、tsarehigher.20ProductionForexample,personalcomputerssoldintheworldmarketmighthavebeenassembledinMalaysiawithChinese-mademonitors,Korean-madekeyboards,U.S.-madechipsandpreinstalledsoftwarepackagesthatwerejointlydevelopedbyU.S.andIndianengineers.21InvestmentRecently,financialmarketshavealsobecomehighl

18、yintegrated.Thisdevelopmentallowsinvestorstodiversifytheirinvestmentportfoliosinternationally.Letsconsidercross-listing.Manymajorcorporationsoftheworld,suchasIBM,Sony,havetheirsharescross-listedonforeignstockexchanges,therebyrenderingtheirsharesinternationallytradableandgainingaccesstoforeigncapital

19、aswell.Forexample,Daimler-Benz,sventureinChinacanbefinancedpartlybyAmericaninvestorswhopurchaseDaimler-BenzssharestradedontheNewYorkStockExchange.22KeywordsCorporategovernanceTheGeneralAgreementonTariffsandTrade(GATT)TheWorldTradeOrganization(WTO)TheEuropeanUnion(EU)TheNorthAmericanFreeTradeAgreemen

20、t(NAFTA)欧盟欧盟关贸总协定关贸总协定公司治理公司治理世界贸易组织世界贸易组织北美自由贸易协定北美自由贸易协定lThe focus of the text is to equip the reader with the“intellectual toolbox”of an effective global managerbut what goal should this effective global manager be working toward?lMaximization of shareholder wealth?orlOther Goals?4.GoalsforIntern

21、ationalFinancialManagement4.1MaximizeShareholderWealthlLong accepted as a goal in the Anglo-Saxon countries,and the ultimate goal of international financial management.4.2OtherGoalslInothercountriesshareholdersareviewedasmerelyoneamongmany“stakeholders”ofthefirmincluding:nEmployeesnSuppliersnCustome

22、rsTheytendtoconsiderthepromotionofthefirmsstakeholdersoverallwelfareasthemostimportantcorporategoal.265.GlobalizationoftheWorldEconomyEmergenceofglobalizedfinancialmarketsEmergenceoftheeuroasaglobalcurrencyTradeliberalizationandeconomicintegration Privatization.lDeregulationofFinancialMarketscoupled

23、withlAdvancesinTechnologyhavegreatlyreducedinformationandtransactionscosts,whichhasledto:lFinancialInnovations,suchasnCurrencyfuturesandoptionsnCross-borderstocklistingsnInternationalmutualfunds5.1EmergenceofGlobalizedFinancialMarkets.5.2EmergenceoftheEuroasaGlobalCurrencylA momentous event in the h

24、istory of world financial systems.lCurrently more than 300 million Europeans in 28 countries are using the common currency on a daily basis.l1欧元=8.5629人民币元 l1欧元=1.3797美元.5.3TradeLiberalizationandEconomicIntegrationlOver the past 50 years,international trade increased nearly three times as fast as wo

25、rld GDP.lEven the once-protectionist and inward-looking countries are now increasingly pursuing free-market and open-economy policies because of the gains from international trade.5.3TradeLiberalizationandEconomicIntegrationlThe General Agreement on Tariffs and Trade(GATT)a multilateral agreement am

26、ong member countries has reduced many barriers to trade.lThe World Trade Organization has the power to enforce the rules of international trade.EU&NAFTAlOn regional level,formal arrangement among countries have been instituted to promote economic integration.lThe EU(European Union)includes 28 member

27、 states that have eliminated barriers to the free flow of goods,capital,and people.lThe North American Free Trade Agreement(NAFTA)calls for phasing out impediments to trade between Canada,Mexico and the United States over a 15-year period.5.4PrivatizationlThesellingoffstate-runenterprisestoinvestors

28、isalsoknownas“Denationalization”.lOftenseeninsocialisteconomiesintransitiontomarketeconomies.lBymostestimatesthisincreasestheefficiencyoftheenterprise.lOftenspursatremendousincreaseincross-borderinvestment.336.MultinationalCorporations Thereareabout60,000MNCsintheworldwithover500,000foreignaffiliate

29、s.Amultinationalcorporation(MNC)canbedefinedasabusinessfirmincorporatedinonecountrythathasproductionandsalesoperationsinseveralothercountries.34MultinationalCorporations ManyMNCsobtainrawmaterialsfromonenationalmarket,financialcapitalfromanother,producegoodswithlaborandcapitalequipmentinathirdcountr

30、yandselltheiroutputinvariousothernationalmarkets.WhichfamousMNCsdoyouknow?35Top 10 MNCs in 2002(billion of dollars)36ThewaysinwhichMNCsgainEconomyofscaleSpreadingR&Dexpendituresandadvertisingcostsovertheirglobalsales;Poolingglobalpurchasingpoweroversuppliers;Utilizingtheirtechnologicalandmanagerialk

31、now-howgloballywithminimumadditioncosts,andsoforth.37ThewaysinwhichMNCsgainGlobaloperationMNCscanusetheirglobalpresencetotakeadvantageofunderpricedlaborservicesavailableincertaindevelopingcountries,andgainaccesstospecialR&Dcapabilitiesresidinginadvancedcountries.38Questions 1.Howisinternationalfinan

32、cialmanagementdifferentfromdomesticfinancialmanagement?39Questions2.Whataremultinationalcorporations(MNCs)?WhatsSpecialabout“International”Finance?1.Whatmajordimensionsetsapartinternationalfinancefromdomesticfinance?a)foreignexchangeandpoliticalrisksb)Marketimperfectionsc)Expandedopportunitysetd)all

33、oftheaboveAnswer:d402.Anexampleofapoliticalriskisa)Expropriationofassetsb)Adversechangeintaxrulesc)Theoppositionpartybeingelectedd)a)andb)arebothcorrectAnswer:d413.Productionofgoodsandserviceshasbecomeglobalizedtoalargeextentasaresultofa)Skilledlaborbeinghighlymobileb)Naturalresourcesbeingdepletedin

34、onecountryafteranotherc)Multinationalcorporationseffortstosourceinputsandlocateproductionanywherewherecostsarelowerandprofitshigherd)CommontastesworldwideforthesamegoodsandservicesAnswer:c424.Supposeyourfirminvests$100,000inaprojectinItaly.Atthetimetheexchangerateis$1.25=1.00.Oneyearlatertheexchange

35、rateisthesame,buttheItaliangovernmenthasexpropriatedyourfirmsassetspayingonly80,000incompensation.Thisisanexampleofa)Exchangerateriskb)Politicalriskc)Marketimperfectionsd)Noneoftheabove,since$100,000=80,000$1.25/1.00Answer:b)435.Mostgovernmentsatleasttrytomakeitdifficultforpeopletocrosstheirbordersi

36、llegally.Thisbarriertothefreemovementoflaborisanexampleofa)Informationasymmetryb)Excessivetransactionscostsc)Racialdiscriminationd)AmarketimperfectionAnswer:d)446.Whenindividualinvestorsbecomeawareofoverseasinvestmentopportunitiesandarewillingtodiversifytheirportfoliosinternationally,a)theytradeonem

37、arketimperfection,informationasymmetry,foranother,exchangeraterisk.b)theybenefitfromanexpandedopportunityset.c)Theyshouldnotbothertoreadortounderstandtheprospectus,sinceitsprobablywritteninaforeignlanguaged)Theyshouldinvestonlyindollarsoreuros.Answer:b457.Nestl,awell-knownSwisscorporation,a)Hasbeena

38、paragonofvirtueinitsoppositiontoallformsofpoliticalrisk.b)Atonetimeplacedrestrictionsonforeignownershipofitsstock.Whenitrelaxedtheserestrictions,thetotalmarketvalueofthefirmfell.c)Atonetimeplacedrestrictionsonforeignownershipofitsstock.Whenitrelaxedtheserestrictions,therewasamajortransferofwealthfro

39、mforeignshareholderstoSwissshareholders.d)NoneoftheaboveAnswer:c)468.Thegoalofshareholderwealthmaximizationa)isnotappropriatefornon-U.S.businessfirmsb)meansthatallbusinessdecisionsandinvestmentsthatafirmmakesaredoneforthepurposeofmakingtheownersofthefirmbetterofffinanciallyc)isasub-objectivethefirms

40、houldattempttoachieveaftertheobjectiveofcustomersatisfactionismetd)isinconflictwiththeprivatizationprocesstakingplaceinthird-worldcountriesAnswer:b479.RecentcorporatescandalsatfirmssuchasEnron,WorldComandtheItalianfirmParmalata)Showthatmanagersmightbetemptedtopursuetheirownprivateinterestsattheexpen

41、seofshareholders.b)ShowthatItalianshareholdersarebetteratmonitoringmanagerialbehaviorthanU.S.shareholders.c)Showthatwhite-collarcriminalshardlyevergetpunished.d)Showthatsocialismisabetterwaytogothancapitalism.Answera)4810.WhilethecorporategovernanceproblemisnotconfinedtotheUnitedStates,a)Itcanbeamuc

42、hmoreseriousprobleminmanyotherpartsoftheworld,wherelegalprotectionofshareholdersisweakornonexistent.b)IthasreacheditshighpointintheUnitedStates.c)TheU.S.legalsystem,withlawsuitsusedonlyasalastresort,ensuredthatanyconflictsofinterestwillsoonbeathingofthepast.d)NoneoftheaboveAnswer:a)4911.Theownersofa

43、businessarethea)Taxpayersb)Workersc)Suppliersd)ShareholdersAnswer:d)5012.Themassiveprivatizationthatiscurrentlytakingplaceinformerlysocialistcountries,willlikelya)eventuallyenhancethestandardoflivingtothesecountriescitizensb)dependonprivateinvestmentc)increasetheopportunitysetfacingthesecountriescit

44、izensd)alloftheaboveAnswer:d)5113.Whencorporategovernancebreaksdowna)Shareholdersareunlikelytoreceivefairreturnsontheirinvestmentsb)Managersmaybetemptedtoenrichthemselvesatshareholderexpensec)Theboardofdirectorsisnotdoingitsjobd)AlloftheaboveAnswer:d)5214.AMNCmaygainfromitsglobalpresencebya)Spreadin

45、gR&Dexpendituresandadvertisingcostsovertheirglobalsalesb)Poolingglobalpurchasingpoweroversuppliersc)Utilizingtheirtechnologicalandmanagerialknow-howgloballywithminimumadditionalcostsd)Alloftheabovearepotentialgains.Answer:d)5315.AMNCcana)Beafactorthatincreasestheopportunitiesofthecitizensoflessdevel

46、opedcountriesb)Beafactorthatincreasestheopportunitysetofdomesticinvestorsc)Increaseeconomicefficiencyd)Alloftheabove.Answer:d)5416.AtrueMNC,withoperationsindozensofdifferentcountriesa)Musteffectivelymanageforeignexchangeriskb)Canignoreforeignexchangerisksinceitisdiversifiedc)Willpaytaxesinonlyitshom

47、ecountyd)Noneoftheabove.Answer:a)5517.Apurelydomesticfirmsourcesitsproducts,sellsitsproducts,andraisesitsfundsdomesticallya)Canfacestiffcompetitionfromamultinationalcorporationthatcansourceitsproductsinonecountry,selltheminseveralcountries,andraiseitsfundsinathirdcountry.b)CanbemorecompetitivethanaMNConitshometurfduetosuperiorknowledgeofthelocalmarketc)Canstillfaceexchangeraterisk,justlikeaMNCd)Alloftheabovearetrue.Answer:d56