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, however focus more on the adjustments of these decisions because of the additional risks multinational firms 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. 

A standard elective course taught in a Chinese business school, this course has a strong China background. Not only does it specifically explain the process and the rationale of RMB exchange rate reform and the forex market in China, but also it presents more 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”
• Chinese Yuan Exchange Rate Regime in the “Impossible Trinity”
• Purchasing Power Parity and Interest Rate Parity
• Foreign Exchange Markets and Quotes
   

  Day 2: Lecture and Classroom Case Discussion

• Classroom Discussion of Case 1
• RMB Offshore Markets and RMB Internationalization
• Definition and Categories of Foreign Exchange Exposure
• Measuring and Managing Transaction Exposure
• Measuring Economic Exposure

           Day 3: Lecture and Classroom Case Discussion

• Classroom Discussion of Case 2
• Overview of Global Financing: Bond and Equity Markets
• Overseas Listing of Chinese Firms:  VIE Structure and new regulations from both the US and Chinese governments
• FDI, Modes of Entry and Access Political Risk in Chinses Firms’ Overseas Investment
• How Global Investments are Affected by the US-China Trade War and the Covid-19 pandemic
• Business Ethics in MNEs 1: FDI and Pollution Exporting to Emerging Markets

           Day 4. Lecture and Group Presentations

• Multinational Capital Budgeting
• Global tax planning: Transfer Pricing and Tax Inversion; Global Minimum Tax-rate
• Business Ethics in MNEs 2: Tax Planning and CSR
• Student Group Presentations 
• Mentoring Group Presentations