国际财务管理Ch总论.pptVIP

InternationalFinancial Management Part IThe International Financial Environment Multinational Financial Management:An Overview and Current Trends in International Finance? Chapter Objectives To identify the main goal of the multinational corporation (MNC) and conflicts with that goal; To describe the key theories that justify international business; and To explain the common methods used to conduct international business. Goal of the MNC The commonly accepted goal of an MNC is to maximize shareholder wealth. We will focus on MNCs that are based in the United States and that wholly own their foreign subsidiaries. Conflicts Against the MNC Goal For corporations with shareholders who differ from their managers, a conflict of goals can exist - the agency problem. Agency costs are normally larger for MNCs than for purely domestic firms. The sheer size of the MNC. The scattering of distant subsidiaries. The culture of foreign managers. Subsidiary value versus overall MNC value. Impact of Management Control The magnitude of agency costs can vary with the management style of the MNC. A centralized management style reduces agency costs. However, a decentralized style gives more control to those managers who are closer to the subsidiary’s operations and environment. Centralized Multinational Financial Management Decentralized Multinational Financial Management Impact of Management Control Some MNCs attempt to strike a balance - they allow subsidiary managers to make the key decisions for their respective operations, but the decisions are monitored by the parent’s management. Impact of Management Control Electronic networks make it easier for the parent to monitor the actions and performance of foreign subsidiaries. For example, corporate intranet or internet email facilitates communication. Financial reports and other documents can be sent electronically too. Impact of Corporate Control Various forms of corporate control can reduce agency costs. Stock compensation for bo