[管理学]跨国公司财务管理 第十七章.pptVIP

Chapter Outline Cost of Capital Cost of Capital in Segmented vs. Integrated Markets Does the Cost of Capital Differ Among Countries? Cross-Border Listings of Stocks Capital Asset Pricing Under Cross-Listings The Effect of Foreign Equity Ownership Restrictions The Financial Structure of Subsidiaries. Cost of Capital The cost of capital is the minimum rate of return an investment project must generate in order to pay its financing costs. For a levered firm, the financing costs can be represented by the weighted average cost of capital: K = (1 – ?)Kl + ?(1 – t)i Weighted Average Cost of Capital Where K = weighted average cost of capital Kl = cost of equity capital for a levered firm i = pretax cost of debt ? = debt to total market value ratio t = marginal corporate income tax rate The Firm’s Investment Decision and the Cost of Capital A firm that can reduce its cost of capital will increase the profitable capital expenditures that the firm can take on and increase the wealth of the shareholders. Internationalizing the firm’s cost of capital is one such policy. Cost of Capital in Segmented vs. Integrated Markets The cost of equity capital (Ke) of a firm is the expected return on the firm’s stock that investors require. This return is frequently estimated using the Capital Asset Pricing Model (CAPM): Cost of Capital in Segmented vs. Integrated Markets If capital markets are segmented, then investors can only invest domestically. This means that the market portfolio (M) in the CAPM formula would be the domestic portfolio instead of the world portfolio. Does the Cost of Capital Differ among Countries? There do appear to be differences in the cost of capital in different countries. When markets are imperfect, international financing can lower the firm’s cost of capital. One way to achieve this is to internationalize the firm’s ownership structure. Real After-Tax Cost of Funds Cross-Border Listings of Stocks Cross-border listings of stocks have become quite popular among