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Multinational companies financing and financing risk and management of the

Author: WanLing From: www.yourpaper.net Posted: 2009-12-01 20:53:39 Read:
[Abstract] a business for multinational corporations, a common identification standard three categories, namely structural standards, performance standards, and standards of conduct. The article analyzes the standard of the multinational corporations and elaborated multinationals financing and financing risk and its management.
[Keywords] multinationals financing Financing Risk Management

Multinationals basic meanings

1. Structure standard
That range through the study of a multinational company, the ownership control of the subsidiary's equity arrangements and the degree of control the source of the nationality of senior managers to identify whether it is for a multinational or type.
Performance standards
By studying the amount of assets a company operating overseas, the amount of production, sales and profits to identify what type of multinational companies. The amount of a multinational company in overseas assets, the amount of production, sales and profits should occupy the proportion can not be ignored, that the so-called "specific gravity can not be ignored: on the one hand, refers to the proportion of larger, generally requires not less than 25%; another refers to the proportion of multinationals or host.
Standards of conduct
That is the way of thinking of the enterprise in the operation and decision-making and policy orientation to identify whether for multinational corporations. Corporations should have a global business strategy: to grasp market opportunities around the world, the pursuit of worldwide maximize profit, it should be reasonable to treat and deal with over the subsidiary's operations, various subsidiary operating as a global business strategy means and ways for them organically combination and coordination, the formation of the strongest operating force, to achieve the objectives of the Corporation.

Second, financing their classification

Multinational companies is a global business strategy, run from the enterprise to the normal production and operation, from the development and growth of the scale of the multinational companies, are bound to the production and cooperation on a global scale. Period, the funds in the company as if the blood of material conditions, is essential in a series of activities in the human body, plays an important role. Thus, the financing strategy to become an important part of the overall strategy of the transnational business multinationals, finance management, especially finance risk management has also become an important content of Multinational Financial Management. Geographical areas of finance, multinational financing can be divided into two categories: domestic finance and international finance.
Multinational corporations to international financing, aimed at fully guard against the risk of a variety of funding based on different funding from a variety of fund-raising channels, time and in full, reasonable and low-cost access to enterprise production and management, investment and capital structure adjust the required funds, and reasonable use to achieve their financial goals. To sum up: the financing costs to minimize, avoid and reduce financing risk, establish the optimal financing structure.

Third, the international financing channels

As multinational companies focus on global management, worldwide resource mobilization and configuration, and adjust the form of the organization of production and operating activities, open up the market to achieve the lowest cost of funding and capital gains to maximize, so multinational corporations in the activities need a lot of money, and will involve many countries and multiple currencies. Therefore, during international operations, international financing activities of multinational companies financing and the inevitable choice. Specifically, refers to the international financing activities in the international financial
On the market, the use of a variety of financial instruments, financing through various financial institutions. Multinationals have different channels and ways of international finance. Financing channels, from multinational internal financing, financing from the home countries of TNCs, from multinational companies to host the financing and financing from international borrowings (including to third countries or international financial institutions, international capital markets financing) and other categories; raise the way, the current major international equity financing, international bond financing, financing of international credit, lease financing, international trade financing and international project financing. Multinational financing channels have a close relationship with the mode of financing: financing may only apply to a specific fund-raising channels, the same channel funds often take different means of financing. Therefore, the multinational companies to raise funds, must achieve a reasonable fit between the two. Financing risk and financing risk management

Blurred due to the international economic and political environment of the complex and volatile countries in the exchange rate, interest rate trend, coupled with the purpose, intent on national lenders and investors of the same multinational companies in international financing is full of a variety of risk . Here, we have referred to as the financing risk financing to achieve the objective of the uncertainty caused by changes in factors such as politics, foreign exchange rates, interest rates and tax policy. Exchange rate risk due to the transfer of capital allocation between different currencies, by definition, will be divided into multinational companies international financing risks, due to the different financing market stability as well as intervention by the Council or the policy of the political risks brought about by the impact of the economic behavior interest rate risk due to the different way the credit, as well as financing costs due to the choice of different means of financing to tax risk. The multinational international finance risk management refers to its financing process risk identification, measurement and analysis and evaluation, and ready to take timely and effective way to prevent and control economic reasonably practicable method for processing, in order to protect financing activities safe and normal development of the management process to ensure their economic interests against loss.

Characteristics of multinational international financing

1. Wide range of international financing activities and complex
Multinationals international financing activities involved in the economic and legal systems of different countries, the economic interests of the different economic agents involved, the greater degree of difficulty than domestic financing activities, involving broader. In particular, the medium of international finance various international currency, resulting caused by exchange rate fluctuations of the exchange rate risk is a major financial risk in multinational companies in the international financing process.
Control of international finance is very strong
Various multinational companies where the national government, starting from their own political and economic interests, in order to balance the country's international balance of payments, the implementation of the monetary policy of the country, as well as prudent management of the country's financial institutions, especially the banking and financial institutions, are all on their own multinationals International financing activities to be regulated. Sovereign state control of international finance, international financing body, object and finance credit conditions to implement the law, the Chief of the restrictive measures. The world's financial authorities are not only depending on the international financing body, the implementation of the Lenient different control measures, currency implementation Lenient different control measures. If control of international finance business undertook in national currency are more stringent, and the wide range of international mobility, exchange firm, loose control of foreign currency exchange rate risk. Other control authorization or approval of the business as well as international finance system, control of the amount of financing, loan interest rate controls, financing deadline control, and so on.
3. International financing risky
International finance and domestic finance, business risk facing the usual credit transactions, debtors unable to pay the loan or extension of the repayment, ie solvency risk. In addition, compared with the domestic finance, international finance is also facing the country risk and exchange rate risk. Country risk refers to the possibility of a sovereign state or a country-specific sovereign borrowers, such as the Ministry of Finance, the central bank and other government agencies, or other borrowers are unable or unwilling to meet its debt obligations to foreign lenders. This risk for the lender is often a difficult to prevent the risk; exchange rate risk due to exchange rate changes in the international economic, trade and financial activities, the collection and payment of foreign currency-denominated assets and liabilities of the business, loss or the possibility of gains. International financing are often denominated in foreign currency, and funding currency devaluation or appreciation of the exchange rate fluctuations, which may affect the borrower's schedule to recover loans and debt income.
Sixth, the trend of multinational financial risk management study will appear
Regional and field range. Multinational companies involved in its business broad face exchange rate risk or exchange rate risk will increase research in this regard will be lasting delve into the depths, and the combination of mathematical models for quantitative analysis, will be more applications to the knowledge of other disciplines, such as finance and econometric.
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