INTERNATIONAL FINANCE

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INTERNATIONAL FINANCE Powered By Docstoc
					INTERNATIONAL
FINANCIAL
MANAGEMENT
GLOBAL FINANCIAL ENVIRONMENT
FOREIGN EXCHANGE THEORY AND MARKETS
FOREIGN EXCHANGE EXPOSURE
FINANCING THE GLOBAL FIRM
FOREIGN INVESTMENT DECISIONS
MANAGING MULTINATIONAL OPERATIONS
     SAP INTERNATIONAL FINANCE
1.    Introduction International Finance :
      Global Financial Environment, ESM, Ch.1
      &2
2.    The Balance of Payments, The Foreign
      Exchange Markets and Foreign Exchange
      Rate Determination
3.    Foreign Currency Derivatives
4.    Transaction Exposure
5.    Operating and Accounting Exposure
6. Global Cost and Availability of Capital &
  Sourcing Equity Globally
7. Financial Structure and International Debt
8. Foreign Investment Decisions
9. Multinational Capital Budgeting
10. International Portfolio Theory and
  Diversification
11. Working Capital Management in the
  MNE
12. Case study & Reading article
REFERENCE
•   Eiteman, at.al. 2004. Multinational
    Business Finance. International Edition,
    Tenth Edition
•   Frederic S. Mishkin. 2005. The Economic
    of Money, Banking & Financial markets.
•   Journal of Multinational Financial
    Management
•   Journal of Finance
•   Journal of International Financial
    Management and Accounting
•   Etc.
      Financial goals and Corporate
               Governance
   MNE is defined as one that has operating
    subsidiaries, branches, or affiliates located
    foreign countries.
   The ownership of some firms is so dispersed
    internationally that they are know as
    transnational corporations.
   The domestic firm managers need to understand
    international financial risks, especially those
    related to foreign exchange rates and the credit
    risks related to trade payments
What is Different About Global
Financial Management?
   Exhibit 1.1.
   These component differences include
    institutions, foreign exchange and political
    risks, and the required modifications of
    financial theory and financial instruments
    What Is the Goal of Management?

   Maximizing shareholder’s wealth (MSW)

   The idea MSW is probably realistic both in
    theory and practice in the Anglo-American
    markets, it is not always realistic elsewhere.
         Shareholder Wealth Maximization
   The Anglo-American markets are characterized
    by a philosophy that a firm’s objective should
    follow the shareholder wealth maximization
   The SWM model assumes as a universal truth
    that the stock market is efficient.
   Risk : unsystematic risk and systematic risk
   The field of agency theory is the study of how
    shareholders can motivate management to
    accept the prescription of the SWM model
    Corporate Wealth Maximization
   European and Japanese markets are characterized by a
    philosophy that a corporation’s objective should be to maximize
    corporate wealth.
   This model has also been labeled the stakeholder capitalism
    model.
   The definition of corporate wealth is much broader than just
    financial wealth.
    The CWM model does not assume that equity markets are either
    efficient or inefficient.
   The CWM model assumes that total risk – that is, operating and
    financial risk.
      Corporate Goals for MNEs
    The MNE must determine for itself the proper
     balance between three common operational
     financial objectives:
1.   Maximization of consolidated after-tax income
2.   Minimization of the firm’s effective global tax
     burden
3.   Correct positioning of the firm’s income, cash
     flows, and available funds
    The primary operational goals of the MNE is
     to maximize consolidated profits, after tax
          Corporate Governance
   The relationship among stakeholders used to
    determine and control the strategic direction and
    performance of an organization
   Corporate governance has many meanings,
    depending on the context in which the term is
    used, as shown in Exhibit 1.2. Dimensions of
    Corporate Governance

				
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