Multinational Business Finance ELEVENTH EDITION Chapter 1 Financial Goals and Corporate Governance David K. Arthur I. Michael H. EITEMAN·STONEHILL·MOFFETT Copyright 2007 Pearson Addison-Wesley.All rights reserved
Copyright © 2007 Pearson Addison-Wesley. All rights reserved. Chapter 1 Financial Goals and Corporate Governance
兰The MuinioEris(MNg） A multinational enterprise (MNE)is defined as one that has operating subsidiaries,branches or affiliates located in foreign countries. The ownership of some MNEs is so dispersed internationally that they are known as transnational corporations. The transnationals are usually managed from a global perspective rather than from the perspective of any single country. Copyright 2007 Pearson Addison-Wesley.All rights reserved. 1-2
Copyright © 2007 Pearson Addison-Wesley. All rights reserved. 1-2 The Multinational Enterprise (MNE) • A multinational enterprise (MNE) is defined as one that has operating subsidiaries, branches or affiliates located in foreign countries. • The ownership of some MNEs is so dispersed internationally that they are known as transnational corporations. • The transnationals are usually managed from a global perspective rather than from the perspective of any single country
Multinational Business Finance While multinational business finance emphasizes MNEs,purely domestic firms also often have significant international activities: -Import export of products,components and services Licensing of foreign firms to conduct their foreign business Exposure to foreign competition in the domestic market Indirect exposure to international risks through relationships with customers and suppliers Copyright 2007 Pearson Addison-Wesley.All rights reserved. 1-3
Copyright © 2007 Pearson Addison-Wesley. All rights reserved. 1-3 Multinational Business Finance • While multinational business finance emphasizes MNEs, purely domestic firms also often have significant international activities: – Import & export of products, components and services – Licensing of foreign firms to conduct their foreign business – Exposure to foreign competition in the domestic market – Indirect exposure to international risks through relationships with customers and suppliers
Global Financial Management There are significant differences between international and domestic financial management: -Cultural issues -Corporate governance issues Foreign exchange risks Political Risk -Modification of domestic finance theories Modification of domestic financial instruments Copyright 2007 Pearson Addison-Wesley.All rights reserved. 1-4
Copyright © 2007 Pearson Addison-Wesley. All rights reserved. 1-4 Global Financial Management • There are significant differences between international and domestic financial management: – Cultural issues – Corporate governance issues – Foreign exchange risks – Political Risk – Modification of domestic finance theories – Modification of domestic financial instruments
The Goal of Management Maximization of shareholders'wealth is the dominant goal of management in the Anglo-American world. In the rest of the world,this perspective still holds true (although to a lesser extent in some countries). In Anglo-American markets,this goal is realistic;in many other countries it is not. Copyright 2007 Pearson Addison-Wesley.All rights reserved. 1-5
Copyright © 2007 Pearson Addison-Wesley. All rights reserved. 1-5 The Goal of Management • Maximization of shareholders’ wealth is the dominant goal of management in the Anglo-American world. • In the rest of the world, this perspective still holds true (although to a lesser extent in some countries). • In Anglo-American markets, this goal is realistic; in many other countries it is not