What are the monetary gains from investing abroad for companies? For instance through profit transfers or headquarter services payments?5 answersInvesting abroad can bring monetary gains for companies through various means. Firstly, multinational companies (MNCs) engage in profit shifting activities to reduce tax burdens, impacting their capital accumulation positively. Secondly, foreign direct investments (FDI) facilitate the transfer of technology, creating new job opportunities and enhancing productive capacity for export, benefiting both investing and host countries. Additionally, corporate taxation influences capital invested abroad, with firms reporting higher profits in low-tax jurisdictions and engaging in income shifting practices to minimize taxes. Moreover, U.S. direct investments abroad have historically yielded higher returns than foreign investments in the U.S., attributed to factors like risk compensation, age effects, and profit-shifting activities by multinational companies. Overall, investing abroad can lead to increased profitability through profit transfers, tax planning strategies, and advantageous return differentials.
What are the economic benefits of outbound foreign direct investment (OFDI) for the home country's GDP?4 answersOutward Foreign Direct Investment (OFDI) can bring economic benefits to the home country's GDP through various channels. OFDI from Chinese enterprises has shown a positive impact on provincial economic growth, potentially due to knowledge spillovers and industrial linkages. Additionally, OFDI can lead to increased innovation levels, quality, and efficiency for firms, contributing to sustainable development. Furthermore, the synergistic effect of OFDI with technological progress, international trade, and industrial structure upgrading can suppress total carbon emissions growth and improve carbon emission efficiency, aligning with environmental goals like "carbon peaking" and "carbon neutrality". These findings highlight the multifaceted benefits of OFDI for the home country's economy, encompassing innovation, economic growth, and environmental sustainability.
How do number of subsidiaries affect debt?5 answersThe number of subsidiaries can affect debt in different ways. One study found that restating conglomerates as subsidiaries led to a 16% increase in bond spread if the subsidiaries did not incorporate some debt as separate legal entities. Another study showed an inversed U relationship between the number of subsidiaries and stock price crash risk, with the relationship being steeper in conglomerates with stronger managerial power and less financial distress. Additionally, subsidiary debt is more likely to be used by firms with divisions that vary more in risk, and subsidiaries are more likely to have their own external debt when they have fewer growth options and higher cash flow than the rest of the firm. These findings suggest that the number of subsidiaries can impact the cost of borrowing and the risk profile of conglomerates.
What are the investments of Philippines in other countries?5 answersPhilippine companies have expanded their operations into foreign markets, particularly in ASEAN and neighboring East Asian countries. These diversification moves have occurred in the last five years and are primarily undertaken by large companies belonging to the largest business groups in the Philippines. However, banks are excluded from these moves. Additionally, there is an increasing number of Philippine transnational corporations successfully investing abroad. These firms engage in market expansion activities, which contribute to their learning and knowledge flows. They also establish long-term relationships with partners in production networks, particularly with suppliers who support in-house innovation.
What factors are important for getting invested by other countries.?4 answersFactors that are important for attracting foreign investment include the quality of institutions, economic growth, government consumption, trade openness, infrastructure quality, economic freedom, corruption level, physical security, expropriation by government, capital control, financial stability, and exchange rate. The time and complexity of procedures, rather than their costs, are key determinants in foreign investors' choices. The consumption market, infrastructure and resources, economic and political environment are also significant factors in the decision to choose an investment location. Specifically, the sub-factor "Market Size" is considered more important. Overall, these factors play a crucial role in attracting foreign investment and have significant policy implications for the growth and development of countries.
What are some examples of companies that have successfully thought globally and acted locally?5 answersCompanies that have successfully thought globally and acted locally include CocaCola, Telefonica, Santander Bank, BBVA, Repsol, Iberdrola, Citibank, Bank of America, Barclays, HSBC, BNP, Deutsche Bank, Unicredito, Vodafone, BT, France Telecom, Total, Exxon, BP, Shell, Chevron, and ENI. These companies have expanded their operations worldwide while also adapting to the local markets they operate in. They have achieved success by maintaining a consistent focus on quality, brand recognition, and understanding the specific needs and preferences of their local customers. By striking a balance between global consistency and local adaptation, these companies have been able to thrive in diverse markets around the world.