Exam 15: International Corporate Governance and Control

An international alliance typically requires a ____ initial outlay than an international acquisition, and the cash flows to be received will typically be ____ than the cash flow resulting from an international acquisition.

An acquirer based in a low-tax country may be able to generate higher cash flows from acquiring a foreign target than an acquirer based in a high-tax country.

Which of the following would probably not cause the stock price of a foreign target to decrease?

Exhibit 15-1 Klimewsky, Inc., a U.S.-based MNC, has screened several targets. Based on economic and political considerations, only one eligible target remains in Malaysia. Klimewsky would like you to value this target and has provided you with the following information: -Refer to Exhibit 15-1. The target's board has indicated that it finds a premium of 30 percent appropriate. You have been asked to negotiate for Klimewsky with the Malaysian target. What is the maximum percentage premium you should be willing to offer?

Which of the following factors is least likely to cause the required rate of return to vary among MNCs assessing the same foreign target?

The U.S. is one of the few countries with agencies that monitor mergers and acquisitions.

The Sarbanes-Oxley Act requires more accountability by executives and the board of directors when assessing acquisitions.

U.S. firms acquire more target firms in ____ than in any other country.

Exhibit 15-1 Klimewsky, Inc., a U.S.-based MNC, has screened several targets. Based on economic and political considerations, only one eligible target remains in Malaysia. Klimewsky would like you to value this target and has provided you with the following information: -Refer to Exhibit 15-1. Based on the information provided above, the net present value of the Malaysian target is $____ million.

The sale of a subsidiary by an MNC is referred to as a divestiture.

An MNC that plans to acquire a target would prefer to make a bid at a time when the local stock market prices are generally ____. Assume that economic conditions are held constant when completing this statement.

A target's previous cash flows are typically an accurate indicator of future cash flows, especially when the target's cash flows would have to be converted into the acquirer's home currency as they are remitted to the parent.

An MNC's parent would consider investing in a target only if the estimated present value of the cash flows it would ultimately receive from the target over time ____ the initial outlay necessary to purchase the target.

If potential acquirers are based in different countries, their required rates of return when considering a specific target will only vary if the desired use of the target is different.