Exam 15: International Corporate Governance and Control

Other things being equal, a foreign subsidiary in China would more likely be divested by the U.S. parent if new information caused the parent to suddenly anticipate that:

Firms based in ____ tend to acquire more U.S. target firms than the other countries listed here.

The initial outlay for a project in a foreign country may decline if property values in that country decline.

An international acquisition may be preferable to the establishment of a new subsidiary because the firm can immediately expand its international business and benefit from existing customer relationships.

When an MNC assesses targets among countries, it would prefer a country in which the growth potential for its respective industry is high and the competition within the industry is not excessive.

According to your text, all of the following are factors to be considered in an international acquisition, except

The valuation of a newly privatized business is generally more difficult than the valuation of a publicly traded firm because:

Which of the following types of international corporate control transaction is probably the most difficult to value by an MNC?

The ideal time to purchase a foreign company is when the spot rate of that company's currency is perceived to be very high and is expected to decrease over time.

Acquirers may have different required rates of return because of differences in the ability to use financial leverage.

The value of an MNC (from the parent's perspective) is independent of the MNC's desired scheduling of remitted funds from the target.

Because of errors in cash flow or exchange rate estimates, the estimated net present value of acquiring a foreign target could be underestimated.

Regarding the valuation of privatized businesses in less developed countries, ____ can normally be estimated with a high degree of accuracy.

Which of the following would not enhance the value of a target from the acquirer's perspective?

From an acquirer's perspective, the ideal conditions would be a weak foreign currency at the time of acquisition and a strengthening of the foreign currency over time as funds are remitted back to the parent.

Which of the following is not directly considered in the decision by a U.S.-based MNC to divest a subsidiary?

If the foreign currency ____ by the time the acquirer makes payment, the acquisition will be more costly, and the cost of the acquisition changes ____ the change in the exchange rate.

The valuation of a proposed international divestiture can be determined by comparing the present value of the cash flows if the project is continued to the proceeds that would be received (after taxes) if the project is divested.

When an MNC assesses targets among countries, it would prefer a country where the growth potential for its industry is ____ and the competition within the industry is ____.

Even after an MNC's accept/reject decision of a foreign acquisition has been made, it should be reassessed at various times. In fact, this analysis may indicate that a previously accepted project should be divested.