Showing papers on "Multinational corporation published in 1975"

Exchange rate changes, inflation, and the value of the multinational corporation

Abstract: THE EFFECTS of differing national rates of inflation and exchange rate changes on the profitability and hence the risk of multinational corporations is currently receiving much attention from both the management of these firms and the accounting profession. In addition, the relationships between changes in currency values, both internal and external, and the international investing, trading, production, and marketing decisions of multinational firms are clearly of great interest to the national governments involved. This paper, with the aid of a two-country model, first focuses on the profitability issue. It then characterizes and analyzes an oligopolistic firm's binational profit-maximizing strategy under inflation and devaluation. The latter work draws heavily on Horst's [14] detailed examination of the effects of differing national tax and tariff rates on the profit-maximizing strategy of a firm selling to two national markets simultaneously. The unit of analysis here is the overseas subsidiary of an oligopolistic multinational corporation' which sells its (the subsidiary's) output both locally (country 1) and abroad (country 2). Country 1 is subject to both inflation and devaluation while country 2's price level and exchange rate are assumed to remain constant throughout this paper. Initially, production will be limited to country 1. The effects of relaxing this restriction to permit production in both countries will be analyzed later on. The results arrived at for a devaluation would be reversed for a revaluation. Accounting practice and economic theory are shown to diverge widely in their implications regarding the effects of these exchange rate changes. Most accountants and firms take a "balance sheet" approach in defining their exposure to exchange rate changes. This approach assumes that only financial items on the current balance sheet whose dollar (or some other base currency) value will be adversely affected by a devaluation are

Optimal international acquisitions

Abstract: The international conglomerate merger movement continues to thrive. Multinational firms in the U.S. and abroad routinely make many (direct) foreign investments by purchasing the stock of foreign firms in related or other industries. Our enquiry is therefore also motivated by the pressing need to establish additional foundations for a financial theory of the multinational firm. These concerns have so far largely escaped attention in the financial literature. It is not the mere existence of foreign subsidiaries or of investors and managers in many countries which makes the analytical setting international from the financial viewpoint. If investors from many countries shared a common currency and traded their stock on a single, central, perfect capital market, the international risk-return structure of capital asset prices would be both analytically indistinguishable from the one country model and equally applicable to all firms wherever they were located. Financially speaking, nations are identifiable if their capital markets are separated by some characteristic of the international financial environment. Of all such characteristics, two of the most ubiquitous are treated separately in this paper: segmentation stemming from an absence of international portfolio investment by individual investors, and exchange risk.

The African University as a Multinational Corporation: Problems of Penetration and Dependency

Abstract: In recent years multinational corporations have been criticized for their exploitation of African economies as well as for their influence on African culture. In this article, the author argues that Western influence is expressed through another African institution— the university. For the author the university is an analogue to a multinational corporation: born as an extension of a metropolitan university whose direction and instructions come from a European country, the African university continues to serve other than African interests. The author describes the symbiotic relationship between education and economic development, and then outlines strategies for changing the university so it will foster cultural as well as economic independence in African nations.

Multinational corporations, taste transfer and underdevelopment: a case study from Kenya

Abstract: The multinational corporation (mnc) is the agency through which advanced technology is transferred to the underdeveloped countries. In the case of the soap industry in Kenya, mnc investment has resulted in increasing unemployment and regional inequality, has made little and possibly a negative contribution to the balance of payments, and has failed to make linkages with the local economy and especially its resources. In particular, the mnc, through its promotion of new ‘brand‐name products, transfers tastes from advanced to backward capitalism, thus reinforcing the process of inappropriate technology transfer. Nationalisation and a controlled industrial strategy are options not open to Kenya given the nature of its existing class structure, reinforced by the mncs and furthering their interest.

The Structuring of International Economic Relations

Abstract: The neo-classical models of international trade are based on almost the same assumptions as models of economic market exchange in general: only economic considerations enter the decision-making process and price is the valid expression of the exchange outcome; structural conditions of complete information and reasonable competition are assumed; instantaneous and correct investment, production, and selling adjustments can be made by each producer; no national governments, international and supranational organizations have any influence on international exchange; historical and social constraints and limitations do not structure exchange and interaction opportunities.1 However, current international economic exchange is dominated by large oligopolistic firms, multinational corporations, and state-trading organizations. Discriminating trading arrange-

Contextual Eactors Influencing Control Strategy of Multinational Corporations

Abstract: The article discusses contextual factors influencing control strategy of multinational corporations (MNCs). The term control is defined as the mechanisms used to assure the execution of organizatio...

World politics and international economics

Abstract: International economists and political scientists analyze the influence of political and economic forces on the world in an effort to explain why the old international economic order has collapsed and what can and should be done about it. The impact of these forces is examined for each of the functional components of the world economy: international monetary system, world trade, multinational enterprises, and foreign aid. The major regional relationships examined are those among industrialized countries and developing countries, and those between industrialized and developing countries and between East and West. A concluding essay suggests a plan for changing national attitudes toward international economic arrangements rather than broad institutional reform. First printed in the Winter 1975 special issue of ''International Organization,'' the book is reproduced without change.

Evaluating Financing Costs for Multinational Subsidiaries

Abstract: This paper presents a methodology for determining the true costs of alternative sources of financing for the multinational corporation when the risk of exchange rate changes is present and different tax rates and regulations are in effect. The cost formulas presented can then be used to calculate the cheapest financing source given the expected exchange rate changes.

The multinational firm and international regulation

Abstract: Writing about alternative international regimes to deal with direct foreign investment (DFI) may seem to be somewhat like discussing a perpetual motion machine: most people would like one for their own purposes; no one has ever built one; and discussions about their construction often take on a certain air of unreality. In contrast to the issue areas of money, trade, and aid, there is no important set of international institutions concentrating primarily on DFI. Numerous bilateral agreements and multilateral arrangements regulate or facilitate, in one way or another, the activities of private investors, but these have not been systematized into a coherent structure. Negotiations for new agreements do not take place within a large and semiformal international arrangement, such as the General Agreement on Tariffs and Trade (GATT), and no large international institution, such as the World Bank in the aid field, exists primarily to give direction to activities in this area.

Collective Bargaining in the Conglomerate, Multinational Firm: Litton's Shutdown of Royal Typewriter

Abstract: Examines the effect of the conglomerate, multinational form of business organization on collective bargaining in domestic manufacturing industries in the case of the Royal Typewriter division of Litton Industries. Events leading up to the transfer of the production of Royal typewriters to overseas plants; Nature of the conglomerate, multinational form of business organization; Impact of the conglomerate form of organization on labor relations. (Abstract copyright EBSCO.)

National Differences in the Use of Internal Transfer Prices

Abstract: Transfer-pricing systems within corporations differ among industrial nations; no one system is ideal for all organizations. Consideration of such a system should include its effects on incentive within the company as well as its usefulness in transferring information. Variation of transfer-pricing patterns according to the country of operation also is an important consideration for multinational corporations.

Recruitment and Reform in the East India Company Army, 1760-1800

Abstract: During the second half of the eighteenth century, the role of the East India Company was significantly altered. In the early part of the century, the main thrust of Company activity was commercial, but this began to change as the French challenged British interests in India and conditions on the sub-continent demanded political and military involvement. Lucy Sutherland has summed up these changes succinctly:The new period was to see a network of English control spread over the neighboring Indian territories and an expansion of territorial power which the whole history of the Company in India made inevitable but which, thanks to the clash with the French and the spectacular exploits of Clive and his colleagues, came more suddenly than anyone could have expected. The Company had long had experience of the problems of government as well as those of administration of commerce; but now (except in the rising China trade) it was those of the government which began to prevail.

Multinational Corporations and the Third World. On the Problem of the Further Integration of Peripheries into the Given Structure of the International Economic System

Abstract: phenomenon: the growth of a capitalist world market, whose developmental dynamics has been determined by the presently dominant metropoles. Today, the multinational corporations, centrally located in the different capitalist metropoles but operating globally, are the principal agents of this dynamics.2 Within the capitalist world market, the penetration of peripheral social formations by multi-national corporations is the most recent stage in a long historical process of the internationalization of capital and labor.3 The analysis of its effects upon the

Multinational Corporate Pricing Strategy in the Developing Countries

Abstract: This paper suggests a new look at corporate pricing policies in developing countries. Because of conditions discussed in the paper, the price elasticity of demand curves in individual markets may be much greater than companies assume. A shift to a low price/high volume may both increase profits and satisfy social needs to which host country governments are sensitive.

Foreign Exchange Accounting of Multinational Corporations

Abstract: The first statement of accounting principles issued by the Financial Accounting Standards Board (FASB) provides analysts with the opportunity to explore in detail the impact on the financial statements of major multinational corporations of income statement and balance sheet translation of their foreign subsidiaries. The combination of floating exchange rates and the importance of multinational corporations earning a significant portion of their income overseas makes necessary an examination of the stability and recurring nature of reported profits from this source. This article analyzes the accounting options available to and used by specific firms with respect to the translation of their foreign income statements and balance sheets.