Multinational Financial Management

Introduction

The objective of this course is to provide students with an overall understanding of financial management practices in multinational companies in a dynamic global business world. The course extends corporate investment and financing decisions 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 how minimum global tax and the digital economy has impact on traditionally global tax planning tactics.

This elective course has a strong China context as most of the students are working in MNEs in China or Chinese MNEs. 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”
• 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 Mini Discussion 1: 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 1 (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)
• Illustrative Case 4: SHEIN’s Business in US (Also covers Business Ethics and ESG 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