Globalization and the Multinational Firm

<p>It can lead to losses when converting back to domestic currency (A)</p> Signup and view all the answers

<p>$916.67 (C)</p> Signup and view all the answers

<p>Unexpected changes in tax rules (C)</p> Signup and view all the answers

<p>Excess competition (D)</p> Signup and view all the answers

<p>Lifted restrictions for foreigners on registered shares (A)</p> Signup and view all the answers

<p>Exposure to lower risk or higher returns (D)</p> Signup and view all the answers

<p>The rights of shareholders and investors may not be effectively protected. (C)</p> Signup and view all the answers

<p>Shareholder wealth maximization (B)</p> Signup and view all the answers

<p>Due to agency problem (D)</p> Signup and view all the answers

<p>As one among many stakeholders (D)</p> Signup and view all the answers

<p>Increased protectionism (C)</p> Signup and view all the answers

<p>Have production and sales operations in multiple countries (D)</p> Signup and view all the answers

<p>The presence of agency problems (C)</p> Signup and view all the answers

<p>Emergence of globalized financial markets (B)</p> Signup and view all the answers

<p>Through decentralized operations across various countries (D)</p> Signup and view all the answers

<p>The growth of the keiretsu (A)</p> Signup and view all the answers

<p>National mutual funds (D)</p> Signup and view all the answers

The risk arising from uncertain future movements in exchange rates, affecting profits made in foreign currencies when converted back to the domestic currency.

The right of a country to issue its own currency, set economic policies, impose taxes, and regulate the movement of people, goods, and capital across its borders.

The potential for a country's political climate or government policies to negatively impact foreign investments and financial operations.

Differences in regulations, market structures, and access to financial services between countries, creating challenges for international businesses.

The broader set of investment and financing opportunities available to businesses operating internationally, including access to diverse markets, capital sources, and skilled labor.

When a government can change the rules of the game for businesses and investments, potentially leading to negative impacts for those involved.

These are factors that prevent markets from operating perfectly, such as laws, costs, information gaps, and unfair taxes.

Nestlé used to have two stock types: bearer shares for foreigners and registered shares for Swiss residents. The difference in price was due to restrictions on foreign ownership. However, Nestlé eliminated these restrictions and allowed foreigners to hold registered shares.

By expanding into global markets, firms can access more resources, markets, and opportunities. Similarly, investors can diversify their portfolios by investing internationally.

Companies can locate production anywhere in the world to gain lower costs and reach a wider market. Investors benefit from lower risk and potentially higher returns by diversifying their investments across countries.

The idea that businesses should not limit themselves to operating only in their home country but should explore and utilize opportunities available globally.

The primary objective of international financial management is to maximize the value of the firm for its owners. This means making decisions that generate the highest possible return for shareholders.

A situation where managers might prioritize their personal interests over the interests of the firm's shareholders, leading to a potential decrease in shareholder value.

A framework designed to regulate the relationship between a company's management and its shareholders, aiming to ensure that managers act in the best interests of shareholders.

The process of removing government control from businesses and allowing them to operate more independently in the market.

Relaxing restrictions and barriers on international trade, leading to increased openness and interconnectedness between economies.

A group of firms that are closely connected through shareholdings, business dealings, and shared goals.

A firm that operates in multiple countries, having production and sales activities beyond its home country.

The interconnectedness and integration of global financial systems, driven by factors like deregulation, financial innovation, and advancements in technology.

A significant financial crisis that originated in the United States and spread globally, causing widespread economic turmoil and influencing international financial management practices.