international financial management basic

1.1Introduction

Globalization: World economy increasingly globalizedIncreasing connectivity and integration of countries and corporationsMultinational corporations (MNCs) dominating the landscape

1.2Globalization and the Growth of International Trade and Capital Flows

Globalization: OverviewThe Growth of International TradeTrade LiberalizationInternational Efforts to Promote Free TradeThe Growth in Trade MNCs Are Affecting Free TradeThe Globalization of Financial MarketsTrends in Financial OpennessThe New Financial Landscape

1.2Globalization and the Growth of International Trade and Capital Flows

The Growth of International TradeTrade LiberalizationComparative AdvantageEuropean Economic Community

Exhibit 1.1 Trade and Financial Openness

Exhibit 1.2Trade Liberalization Dates by Country

1.2Globalization and the Growth of International Trade and Capital FlowsThe Growth of International TradeInternational Efforts to Promote Free TradeGATTWTOEUNAFTAASEANRecent Developmentsoutsourcing

1.2Globalization and the Growth of International Trade and Capital Flows

The Growth of International TradeThe Growth in Trade

MNCs Are Affecting Free Trade

Exhibit 1.3 Panel AThe Growth in International Trade

Exhibit 1.3 Panel BThe Growth in International Trade

Exhibit 1.3 Panel CThe Growth in International Trade

1.2Globalization and the Growth of International Trade and Capital Flows

The Globalization of Financial MarketTrends in Financial OpennessThe New Financial LandscapeDerivative securitySecuritization

1.3 Multinational CorporationsMultinational Corporations: Overview

Definition of an MNC

How MNCs Enter Foreign Markets

The Goals of an MNC

Corporate Governance Around the World

Exhibit 1.4Worlds Top Nonfinancial Transnational Corporations by Foreign Assets

1.3 Multinational Corporations

Definition of an MNC:A firm that does business in two or more foreign countries

How MNCs Enter Foreign MarketsRoyaltiesLicensingFranchisingJoint venturesForeign Direct Investment (FDI)

1.3 Multinational CorporationsThe Goals of an MNCInvestment Time HorizonStakeholder AlternativeAgency Theory and Corporate Governance

1.3 Multinational CorporationsCorporate Governance Around the WorldCorporate governance differences across countries affects a firms valuationMay lead to cross-listing of stocks

Exhibit 1.5Methods of Overcoming Agency Problems Due to the Separation of Ownership and Control

Exhibit 1.6 Panel AForeign Direct Investment

Exhibit 1.6 Panel BForeign Direct Investment

Exhibit 1.7Cross-Border Mergers and Acquisitions by Buyer and Seller, 1990-2004 (in the millions of dollars)

1.4Other Important International Players

International PlayersInternational banksMultilateral Development BanksWTOOECDInternational institutionsIMFWorld Bank

1.5 Globalization and the Multinational Firm: Benefactor or Menace?

Two Sides to the Globalization Argument:

Pro: Benefactors

Con: Anti-globalists