Ch15-Int'l Corporate Governance & Control
Ch15-Int'l Corporate Governance & Control
International Corporate
Governance and Control
1
International Corporate
Governance
2
International
Corporate Control
Decisions made by managers to serve
themselves rather than shareholders.
International Acquisitions Activities.
Barriers to International Control
Anti-takeover amendments implemented
by target
Poison pills implemented by target
Host government barriers
3
International
Corporate Control (cont.)
Model for valuing a foreign target
4
International
Corporate Control (cont.)
5
Factors That Affect the Expected
Cash Flows of the Foreign Target
Target-Specific Factors
Target’s previous cash flows
Managerial talent of the target
Country-Specific Factors
Target’s local economic conditions
Target’s local political conditions
Target’s industry conditions
Target’s currency conditions
Target’s local stock market conditions
Taxes applicable to the target
6
Valuation Process
7
Valuation Process (cont.)
Estimating the Target’s Value
By measuring target’s expected cash flows that can
be determined by:
Revenue
Expenses
Earnings and cash flows
Cash flows to parent
Then:
Estimating the target’s future sales price
Valuing the target based on estimated cash
flows
Sources of uncertainty
8
Valuation Process (cont.)
9
Valuation Process (cont.)
Changes in Valuation over Time
Caused by:
Impact of stock market conditions
Impact of stock market conditions on the
value of private firms
Impact of exchange rates
Combines stock market and exchange rate
effects
Impact of market anticipating regarding the
target
10
Valuations of Target May Vary
among MNCs
11
Other Types of MNC Restructuring
12
Other Types of MNC Restructuring
(cont.)
13
Restructuring decisions as Real
Options
14