Multinational Finance, 6th Edition

Chapter 1An Introduction to Multinational Finance

The notes I handle no better than many pianists, but the pauses between the notes—ah, that is where the art resides!

—Artur Schnabel

This book assumes the viewpoint of the financial manager of a multinational corporation (MNC) with investment or financial operations in more than one country. Managers encounter new opportunities as they extend their operations into international markets, as well as new costs and risks. The challenge facing the multinational financial manager is to successfully develop and execute business and financial strategies in more than one culture or national business environment.

1.1 The Goals of the Multinational Corporation

Exhibit 1.1 presents the ownership and control structure that is typical of companies in market economies. In these countries, the primary goal of the firm is to maximize shareholder wealth. However, shareholder wealth maximization is far from the only objective of the MNC. Many other stakeholders have an interest in the firm, including suppliers, customers, debtholders, managers, business partners, employees, and society at large. The objectives of these other stakeholders often are in conflict with shareholder wealth maximization, especially during periods of financial distress.

Stakeholders include those with an interest—or stake—in the firm

Exhibit 1.1 Corporate Governance ...