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C AlanC Shapiro 著赵锡军编审顾苏秦译校 PARTIENVIRONMENTOFINTERNATIONALFINANCIALMANAGEMENT CHAPTER1INTRODUCTION MULTINATIONALENTERPRISEANDMULTINATIONALFINANCIALMANAGEMENT LearningObjectives Tounderstandthenatureandbenefitsofglobalization Toexplainwhymultinationalcorporationsarethekeyplayersininternationaleconomiccompetitiontoday Toclassifythethreehistoricaltypesofmultinationalcorporation MNC andexplaintheirmotivationsforinternationalexpansion ToexplainwhymanagersofMNCsneedtoexploitrapidlychangingglobaleconomicconditionsandwhypoliticalpolicymakersmustalsobeconcernedwiththesamechangingconditions LearningObjectives Toidentifytheadvantagesofbeingmultinational includingthebenefitsofinternationaldiversification Todescribethegeneralimportanceoffinancialeconomicstomultinationalfinancialmanagementandtheparticularimportanceoftheconceptsofarbitrage marketefficiency capitalassetpricing andtotalrisk TocharacterizetheglobalfinancialmarketplaceandexplainwhyMNCmanagersmustbealerttocapitalmarketimperfectionsandasymmetriesintaxregulations 1 1THERISEOFTHEMULTINATIONALCORPORATION Amultinationalcorporation MNC isacompanyengagedinproducingandsellinggoodsorservicesinmorethanonecountry AbrieftaxonomyoftheMNCanditsevolutionRaw MaterialsSeekers Raw materialsseekersweretheearliestmultinationals thevillainsofinternationalbusiness MarketSeekers Themarketseekeristhearchetypeofthemodernmultinationalfirmthatgoesoverseastoproduceandsellinforeignmarkets CostMinimizers Thesefirmsseekoutandinvestinlowercostproductionsitesoverseas forexample HongKong Taiwan andIreland toremaincost competitivebothathomeandabroad 1 1THERISEOFTHEMULTINATIONALCORPORATION thetruemultinationalcorporationischaracterizedmorebyitsstateofmindthanbythesizeandworldwidedispersionofitsassets theessentialelementthatdistinguishesthetruemultinationalisitscommitmenttoseekingout undertaking andintegratingmanufacturing marketing R D andfinancingopportunitiesonaglobal notdomestic basis Inaworldinwhichchangeistheruleandnottheexception thekeytointernationalcompetitivenessistheabilityofmanagementtoadjusttochangeandvolatilityataneverfasterrate Newglobalmanagerisneeded 1 2THEINTERNATIONALIZATIONOFBUSINESSANDFINANCE Theexistenceofglobalcompetitionandglobalmarketsforgoods services andcapitalisafundamentaleconomicrealitythathasalteredthebehaviorofcompaniesandgovernmentsworldwide Politiciansandlaborleaders unlikecorporateleaders usuallytakeamoreparochialviewofglobalization Internationaleconomicintegrationreducesthefreedomofgovernmentstodeterminetheirowneconomicpolicy Thestressescausedbyglobalcompetitionhavestirredupprotectionistsandgivenrisetonewconcernsabouttheconsequencesoffreetrade TheU S Canadatradeagreement theNorthAmericanFreeTradeAgreement NAFTA 1 3MULTINATIONALFINANCIALMANAGEMENT THEORYANDPRACTICE Themainobjectiveofmultinationalfinancialmanagementistomaximizeshareholderwealthasmeasuredbyshareprice Shareholdersarethelegalownersofthefirmandmanagementhasafiduciaryobligationtoactintheirbestinterests Financialmanagementistraditionallyseparatedintotwobasicfunctions theacquisitionoffunds financingdecision andtheinvestmentofthosefunds investmentdecision Therisksofmultinationalmanagementincludeexchangeandinflationrisks internationaldifferencesintaxrates multiplemoneymarkets oftenwithlimitedaccess currencycontrols andpoliticalrisks suchassuddenorcreepingexpropriation ThemostadvantageofMNCistheinternationaldiversificationofmarketsandproductionsites 1 3MULTINATIONALFINANCIALMANAGEMENT THEORYANDPRACTICE Someconceptsoffinancialeconomics ArbitrageMarketefficiencyCapitalAssetPricingRiskclassification 1 4OUTLINEOFTHEBOOK Thisbookisdividedintofiveparts PartI EnvironmentofInternationalFinancialManagementPartII ForeignExchangeRiskManagementPartIII FinancingtheMultinationalCorporationPartIV ForeignInvestmentAnalysisPartV MultinationalWorkingCapitalManagement PARTIENVIRONMENTOFINTERNATIONALFINANCIALMANAGEMENT CHAPTER2THEFUNDAMENTALOFINTERNATIONALFINANCE LearningObjectives Toexplaintheconceptofanequilibriumexchangerate Toidentifythebasicfactorsaffectingexchangeratesinafloatingexchangeratesystem Tocalculatetheamountofcurrencyappreciationordepreciationassociatedwithagivenexchangeratechange Todistinguishbetweenafreefloat amanagedfloat atarget zonearrangement andafixed ratesystemofexchangeratedetermination Todistinguishbetweenthecurrentaccount thefinancialaccount andtheofficialreservesaccountanddescribethelinksamongtheseaccounts 2 1SETTINGTHEEQUILIBRIUMSPOTEXCHANGERATE Exchangeratescanbeforspotorforwarddelivery Aspotrateisthepriceatwhichcurrenciesaretradedforimmediatedelivery orintwodaysintheinterbankmarket Aforwardrateisthepriceatwhichforeignexchangeisquotedfordeliveryataspecifiedfuturedate Theexchangeratesaremarket clearingpricesthatequilibratesuppliesanddemandsintheforeignexchangemarket 2 1SETTINGTHEEQUILIBRIUMSPOTEXCHANGERATE FactorsthatAffecttheEquilibriumExchangeRate Asthesupplyanddemandschedulesforacurrencychangeovertime theequilibriumexchangewillalsochange RelativeInflationRatesRelativeInterestRatesRelativeEconomicGrowthRatesPoliticalandEconomicRiskExpectationandAssetMarketmodelCalculatingExchangeRateChange 2 2ALTERNATIVEEXCHANGERATESYSTEMS Theinternationalmonetarysystemrefersprimarilytothesetofpolicies institutions practices regulations andmechanismsthatdeterminetherateatwhichonecurrencyisexchangedforanother Thissectionconsidersfivemarketmechanismsforestablishingexchangerates freefloatmanagedfloattarget zonearrangementfixed ratesystemthecurrenthybridsystem 2 3BALANCE OF PAYMENTCATEGORIES Thebalanceofpaymentisanaccountingstatementthatsummarizesalltheeconomictransactionsbetweenresidentsofthehomecountryandtheresidentsofallothercountries Currencyinflowsarerecordedascredits andoutflowsarerecordedasdebits Therearethreeprincipalbalance of paymentscategories 1 Currentaccount2 Capitalaccount3 FinancialaccountFormostcountries onlythecurrentandfinancialaccountsaresignificant PARTIENVIRONMENTOFINTERNATIONALFINANCIALMANAGEMENT CHAPTER3COUNTRYRISKANALYSIS LearningObjectives TodefinewhatcountryriskmeansfromthestandpointofanMNC Todescribethesocial cultural political andeconomicfactorsthataffectthegenerallevelofriskinacountryandidentifykeyindicatorsofcountryriskandeconomichealth Todescribewhatwecanlearnabouteconomicdevelopmentfromthecontrastingexperiencesofavarietyofcountries Todescribetheeconomicandpoliticalfactorsthatdetermineacountry sabilityandwillingnesstorepayitsforeigndebts 3 1MEASURINGPOLITICALRISK Expropriationisthemostobviousandextremeformofpoliticalrisk Thereareothersignificantpoliticalrisks includingcurrencyortradecontrols changesintaxorlaborlaws regulatoryrestrictions andrequirementsforadditionallocalproduction FactorsinpoliticalriskforecastingmodelPoliticalStabilityEconomicFactorsSubjectiveFactorsPoliticalRiskandUncertainPropertyRightsAusefulindicatorofthedegreeofpoliticalriskistheseriousnessofcapitalflight 3 2ECONOMICANDPOLITICALFACTORSUNDERLYINGCOUNTRYRISK keyfactorsthatdeterminetheeconomicperformanceofacountryanditsdegreeofriskFiscalIrresponsibilityMonetaryInstabilityControlledExchangeRateSystemWastefulGovernmentSpendingResourceBaseCountryRiskandAdjustmenttoExternalShocksKeyIndicatorsofCountryRiskandEconomicHealth 3 3COUNTRYRISKANALYSISININTERNATIONALBANKING Fromabank sstandpoint countryriskisthepossibilitythatborrowersinacountrywillbeunableorunwillingtoserviceorrepaytheirdebtstoforeignlendersinatimelymanner Whatultimatelydeterminesanation sabilitytorepayforeignloansisthatnation sabilitytogenerateU S dollarsandotherhardcurrencies TheGovernment sCost BenefitCalculusLessonsfromtheInternationalDebtCrisis PARTIIFOREIGNEXCHANGERISKMANAGEMENT CHAPTER4MEASURINGANDMANAGINGTRANSLATIONANDTRANSACTIONEXPOSURE LearningObjectives Todefinetranslationandtransactionexposureandoperatingexposure distinguishthem Todescribethefourprincipalcurrencytranslationmethodsavailableandtocalculatetranslationexposureusingthesedifferentmethods Toidentifythebasichedgingstrategyandtechniquesusedbyfirmstomanagetheircurrencytransactionandtranslationrisks Todescribethecostsandbenefitassociatedwithusingthedifferenthedgingtechniques Todescribeandassesstheeconomicsoundnessofthevariouscorporatehedgingobjectives 4 1ALTERNATIVEMEASURESOFFOREIGNEXCHANGEEXPOSURE Thethreebasictypesofexposurearetranslationexposure transactionexposure andoperatingexposure Transactionexposureandoperatingexposurecombinetoformeconomicexposure Translationexposure alsoknownasaccountingexposure arisesfromtheneed forpurposesofreportingandconsolidation toconvertthefinancialstatementsofforeignoperationsfromthelocalcurrencies LC involvedtothehomecurrency HC Transactionexposureresultsfromtransactionsthatgiverisetoknown contractuallybindingfutureforeign currency denominatedcashinflowsoroutflows Operatingexposuremeasurestheextenttowhichcurrencyfluctuationscanalteracompany sfutureoperatingcashflows thatis itsfuturerevenuesandcosts 4 2ALTERNATIVECURRENCYTRANSLATIONMETHODS Companieswithinternationaloperationswillhaveforeign currency denominatedassetsandliabilities revenues andexpenses ThefinancialstatementsofanMNC soverseassubsidiariesmustbetranslatedfromlocalcurrencytohomecurrencybeforeconsolidationwiththeparent sfinancialstatements Fourprincipaltranslationmethodsareavailable thecurrent noncurrentmethod themonetary nonmonetarymethod thetemporalmethod andthecurrentratemethod Inpractice therearealsovariationsofeachmethod 4 2ALTERNATIVECURRENCYTRANSLATIONMETHODS Current Noncurrentmethodalltheforeignsubsidiary scurrentassetsandliabilitiesaretranslatedintohomecurrencyatthecurrentexchangerate Eachnoncurrentassetorliabilityistranslatedatitshistoricalexchangerate thatis attherateineffectatthetimetheassetwasacquiredortheliabilitywasincurred Theincomestatementistranslatedattheaverageexchangerateoftheperiod exceptforthoserevenuesandexpenseitemsassociatedwithnoncurrentassetsorlibilities 4 2ALTERNATIVECURRENCYTRANSLATIONMETHODS Monetary NonmonetaryMethodMonetaryitems forexample cash accountspayableandreceivable andlong termdebt aretranslatedatthecurrentrate nonmonetaryitems forexample inventory fixedassets andlong terminvestments aretranslatedathistoricalrates Incomestatementitemsaretranslatedattheaverageexchangerateduringtheperiod exceptforrevenueandexpenseitemsrelatedtononmonetaryassetsandliabilities 4 2ALTERNATIVECURRENCYTRANSLATIONMETHODS TemporalMethodUnderthetemporalmethod inventoryisnormallytranslatedatthehistoricalrate butitcanbetranslatedatthecurrentrateiftheinventoryisshownonthebalancesheetatmarketvalues inthetemporalmethod itisbasedontheunderlyingapproachtoevaluatingcost historicalversusmarket Incomestatementitemsnormallyaretranslatedatanaveragerateforthereportingperiod CurrentRateMethodThecurrentratemethodisthesimplest Allbalancesheetandincomeitemsaretranslatedatthecurrentrate 4 4DESIGNINGAHEDGINGSTRATEGY Hedgingaparticularcurrencyexposuremeansestablishinganoffsettingcurrencypositionsoastolockinadollar homecurrency valueforthecurrencyexposureandtherebyeliminatetheriskposedbycurrencyfluctuations Theusefulnessofaparticularhedgingstrategydependsonbothacceptabilityandquality TheobjectivesinmanagementbahaviorMinimizetranslationexposure Minimizeearningsfluctuationsowingtoexchangeratechanges Minimizetransactionexposure Minimizeeconomicexposure Minimizeforeignexchangeriskmanagementcosts Avoidsurprises 4 4DESIGNINGAHEDGINGSTRATEGY CostsandBenefitsofStandardHedgingTechniquesExposureNettingExposurenettinginvolvesoffsettingexposuresinonecurrencywithexposuresinthesameoranothercurrency whereexchangeratesareexpectedtomoveinawaysuchthatlosses gains onthefirstexposedpositionwillbeoffsetbygains losses onthesecondcurrencyexposure AccountingforHedgingandFASB133 4 5MANAGINGTRANSLATIONEXPOSURE Firmshavethreeavailablemethodsformanagingtheirtranslationexposure 1 adjustingfundflows 2 enteringintoforwardcontracts and 3 exposurenetting Fundsadjustmentinvolvesalteringeithertheamountsorthecurrencies orboth oftheplannedcashflowsoftheparentoritssubsidiariestoreducethefirm slocalcurrencyaccountingexposure EvaluatingAlternativeHedgingMechanismsOrdinarily theselectionofafunds adjustmentstrategycannotproceedbyevaluatingeachpossibletechniqueseparatelywithoutriskingsuboptimization 4 6MANAGINGTRANSACTIONEXPOSURE VarioustechniquesformanagingtransactionexposureForwardMarketHedgeMoney MarketHedgeRiskshiftingPricingDecisionExposurenettingCurrencyRiskSharingCurrencyCollarsCross HedgingForeignCurrencyOptions PARTIIFOREIGNEXCHANGERISKMANAGEMENT CHAPTER5MEASURINGANDMANAGINGECONOMICEXPOSURE LearningObjectives Todefineeconomicexposureandexchangeriskanddistinguishbetweenthetwo Todefineoperatingexposureanddistinguishbetweenitandtransactionexposure Toidentifythebasicfactorsthatdeterminetheforeignexchangeriskfacedbyaparticularcompanyorproject Todescribethemarketing production andfinancialstrategiesthatareappropriateforcopingwiththeeconomicconsequencesofexchangeratechanges Toexplainhowcompaniescandevelopcontingencyplanstocopewithexchangeriskandtheconsequencesoftheirabilitytorapidlyrespondtocurrencychanges Toidentifytheroleofthefinancialexecutiveinfacilitatingtheoperationofanintegratedexchangeriskmanagementprogram 5 1FOREIGNEXCHANGERISKANDECONOMICEXPOSURE Themostimportantaspectofforeignexchangeriskmanagementistoincorporatecurrencychangeexpectationsintoallbasiccorporatedecisions Economicexposurecanbeseparatedintotwocomponents transactionexposureandoperatingexposure Theexchangeratechangesthatgiverisetooperatingexposurearerealexchangeratechanges Therealexchangerateisdefinedasthenominalexchangerateadjustedforchangesintherelativepurchasingpowerofeachcurrencysincesomebaseperiod 5 2THEECONOMICCONSEQUENCESOFEXCHANGERATECHANGES Transactionexposurearisesoutofthevarioustypesoftransactionsthatrequiresettlementinaforeigncurrency Thegreateracompany sflexibilitytosubstitutebetweenhome countryandforeign countryinputsorproduction thelessexchangeriskthecompanywillface Themajorconclusionisthatthesectoroftheeconomyinwhichafirmoperates export import competing orpurelydomestic thesourcesofthefirm sinputs imports domestictradedornontradedgoods andfluctuationsintherealexchangeratearefarmoreimportantindelineatingthefirm strueeconomicexposurethanisanyaccountingdefinition 5 3IDENTIFYINGECONOMICEXPOSURE AspenSkiingCompanyPetr leosMexicanosToyotaMotorCompany 5 4CALCULATINGECONOMICEXPOSURE SpectrumManufacturingABexampleSpectrum sAccountingExposureSpectrum sEconomicExposureScenario1 AllVariablesRemaintheSame Scenario2 KronaSalesPricesandAllCostsRise VolumeRemainstheSame Scenario3 PartialIncreasesinPrices Costs andVolume 5 6MANAGINGOPERATINGEXPOSURE Becausecurrencyriskaffectsallfacetsofacompany soperations itshouldnotbetheconcernoffinancialmanagersalone MarketingManagementofExchangeRiskMarketSelectionPricingStrategyProductStrategyProductionManagementofExchangeRiskInputMixShiftingProductionAmongPlantsPlantLocationRaisingProductivityPlanningforExchangeRateChangesFinancialManagementofExchangeRisk PARTIIIFINANCINGTHEMULTINATIONALCORPORATION CHAPTER6INTERNATIONALFINANCINGANDNATIONALCAPITALMARKETS LearningObjectives Todescribetrendsanddifferencesincorporatefinancingpatternsaroundtheworld TodefinesecuritizationandexplaintheforcesthatunderlieitandhowithasaffectedthefinancingpoliciesofMNCs Toexplainwhybanklendingisonthedeclineworldwideandhowbankshaverespondedtotheirlossofmarketshare Toexplainwhatismeantbytheglobalizationoffinancialmarketsandidentifythefactorsthathaveaffectedtheprocessofglobalization Todescribetheexternalmediumandlong termfinancingoptionsavailabletothemultinationalcorporation Toidentifythefunctionsandconsequencesoffinancialmarkets Todescribethelinksbetweennationalandinternationalcapitalmarkets Todescribethetypesandrolesofdevelopmentbanks 6 1CORPORATESOURCESANDUSESOFFUNDS Firmshavethreegeneralsourcesoffundsavailable internallygeneratedcash short termexternalfunds andlong termexternalfunds FinancialMarketsversusFinancialIntermediariesBankborrowingvssellsecuritiesFinancialSystemsandCorporateGovernanceeffectivecorporategovernancerequiresthateveryoneinvolvedingoverningthecompanymustbeassignedacarefullychosenroleandtheymustbeprovidedwithresponsibility authority andaccountability alltobedonewiththeparamountobjectiveofcreatingshareholdervalue Thedifferenceinfinancialsystemshasrealconsequencesforfinancialstructures GlobalizationofFinancialMarkets 6 2NATIONALCAPITALMARKETSASINTERNATIONALFINANCIALCENTERS Theprincipalfunctionsofafinancialmarketanditsintermediariesaretomobilizesavingsandtoallocatethosefundsamongpotentialusersonthebasisofexpectedrisk adjustedreturns InternationalFinancialMarketsForeignaccesstodomesticMarketsTheforeignbondmarketTheforeignbankmarketTheforeignequitymarketGlobalizationoffinancialmarketshasitsdownside 6 3DEVELOPMENTBANK Tohelpprovidethehugefinancialresourcesrequiredtopromotethedevelopmentofeconomicallybackwardareas theUnitedStatesandothercountrieshaveestablishedavarietyofdevelopmentbanks whoselendingisdirectedtoinvestmentsthatmightnototherwisebefundedbyprivatecapital Therearethreetypesofdevelopmentbanks theWorldBankGroup regionaldevelopmentbanks andnationaldevelopmentbanks Private SectorAlternatives PARTIIIFINANCINGTHEMULTINATIONALCORPORATION CHAPTER7THEEUROMARKETS LearningObjectives TodescribetheEurocurrencyandEurobondmarketsandexplainwhytheyexist TodescribethecharacteristicsandpricingofEurocurrencyloans Eurobonds Euronotes andEuro commercialpaper ToexplainthelinksbetweentheEuromarketsandtheirdomesticcounterparts 7 1THEEUROCURRENCYMARKET AEurocurrencyisadollarorotherfreelyconvertiblecurrencydepositedinabankoutsideitscountryoforigin U S dollarsondepositinLondonbecomeEurodollars TheEurocurrencymarketthenconsistsofthosebanks calledEurobanks thatacceptdepositsandmakeloansinforeigncurrencies ModernOriginsofEurocurrencyThecreationofEurodollarEurocurrencyLoans 7 1THEEUROCURRENCYMARKET RelationshipBetweenDomesticandEurocurrencyMoneyMarketsThepresenceofarbitrageactivitiesensuresacloserelationshipbetweeninterestratesinnationalandinternational Eurocurrency moneymarkets InterestDifferentialsEurocurrencySpreadsEuromarketTrend 7 2EUROBONDS Unlikedomesticbondmarkets however theEurobondmarketisalmostentirelyfreeo