What is the commonly accepted goal of MNC?
However, the commonly accepted objective of an MNC is to maximize stockholder wealth on a global basis, as reflected by stock price. Managers of an MNC may make decisions that conflict with the firm’s goal to maximize shareholder wealth.
Which of the following is are a reason for why agency costs are generally larger for multinational firms than domestic firms?
ANSWER: The agency costs are normally larger for MNCs than purely domestic firms for the following reasons. First, MNCs incur larger agency costs in monitoring managers of distant foreign subsidiaries. Second, foreign subsidiary managers raised in different cultures may not follow uniform goals.
Which of the following theories identifies the non transferability of resources as a primary reason for international business?
theory of comparative advantage. Which of the following theories identifies the non-transferability of resources as a reason for international business? theory of comparative advantage.
Which of the following theories suggests that firms seek to penetrate new markets over time group of answer choices?
Product cycle theory suggests that firms seek to penetrate new markets over time.
What mean MNC?
multinational corporation
A multinational corporation (MNC) has facilities and other assets in at least one country other than its home country. A multinational company generally has offices and/or factories in different countries and a centralized head office where they coordinate global management.
Which one of the following causes differences in the cost of capital between countries?
Country differences, such as differences in the risk-free interest rate and differences in risk premiums across countries, can cause the cost of capital to vary across countries. If an MNC’s cash flows are more stable, it can probably handle more debt than an MNC with erratic cash flows.
What do you mean by agency problem for MNC?
The agency problem is a conflict of interest inherent in any relationship where one party is expected to act in another’s best interests. In corporate finance, the agency problem usually refers to a conflict of interest between a company’s management and the company’s stockholders.
What are agency costs in Finance?
An agency cost is a type of internal company expense, which comes from the actions of an agent acting on behalf of a principal. Agency costs typically arise in the wake of core inefficiencies, dissatisfactions, and disruptions, such as conflicts of interest between shareholders and management.
What is the primary goal of multinational companies?
A company may seek to become an MNC in order to grow its customer base around the globe and increase its market share abroad. The primary goal is therefore to increase profits and growth. Companies may want to introduce their products in ways that are modified or tailored to specific cultural sensibilities abroad.
What are most commonly classified as a direct foreign investment?
Horizontal FDI
The most common type of FDI is Horizontal FDI, which primarily revolves around investing funds in a foreign company belonging to the same industry as that owned or operated by the FDI investor.
Which of the following theories suggests that firms seek to penetrate new markets over time quizlet?
imperfect markets theory. Which of the following theories suggests that firms seek to penetrate new markets over time? a. theory of comparative advantage.
When conducting international business firms generally face the most risk when they?
Ch 1, Q 76; When conducting international business, firms generally face the most risk when they: make acquisitions of existing operations.
