Multinational Financial Management

Introduction

The objective of this course is to provide students with an overall understanding of the financial management practices in multinational companies in a dynamic global business world. The course extends investment and financing decisions in corporate finance by  emphasizing the adjustments in multinational firms due to additional risks they are exposed to, namely, foreign exchange risk and political risk, as well as the uneven tax rates in countries that provide room for global tax planning. 

This is a standard elective course taught in a Chinese business school, so it  has a strong China background. Not only does it specifically explain the rationale and the process of RMB exchange rate reform and the forex market in China, but also it presents many examples of Chinese firms in global investing and financing and hedging foreign exchange risks. This course focuses on analytical skills rather than quantitative calculations. However, students should demonstrate that they have fundamental knowledge in Macroeconomics (GDP and inflation) and Corporate Finance (NPV, discount rate, cost of capital, etc.).

Course content

Day 1. Lecture

• What is Special in Multinational Financial Management
• International Monetary System and the “Impossible Trinity”
• Class Discussion 1: Bitcoin, Libra by Facebook and DCEP by PBoC
• Illustrative Case 1: A Story of Two Countries and Two Assets
• Chinese Yuan Exchange Rate Regime in the “Impossible Trinity”
• Purchasing Power Parity and Interest Rate Parity
• Class Discussion 2: You Don’t Eat Hamburgers to Live in Shanghai
   

Day 2: Lecture and Classroom Case Discussion

• Foreign Exchange Markets and Quotes
• RMB Offshore Markets and RMB Internationalization
• Definition and Categories of Foreign Exchange Exposure
• Measuring and Managing Transaction Exposure
• Illustrative Case 2：Hedging Practice of Chinese Mineral Importer A 
• Measuring Economic Exposure
   

Day 3: Lecture and Classroom Case Discussion

• Classroom Discussion of Case 2 (also covers Business Ethics in MNEs)
• FDI, Modes of Entry and Access Political Risk in Chinses Firms’ Overseas Investment
• Illustrative Case 3: TPS’s Transplanting in Southeast Asia(Also covers Business Ethics in MNEs)
• Overview of Global Financing: Bond and Equity Markets
• Overseas Listing of Chinese Firms:  VIE Structure and new regulations from both the US and the Chinese governments
• Global Taxation: Tax-planning, Transfer Pricing and Tax Inversion
• BEPS and New Trends in Global Taxation System (by TA, also covers Business Ethics in MNEs))

Day 4. Lecture and Group Presentations

• Student Group Presentations 
• Mentoring Group Presentations