Political Risk
Multinational Corporation (MNC)
World Trade Organization (WTO)
European Central Bank
Market Imperfections
Corporate Governance
General Agreement on Tariffs and Trade (GATT)
Foreign Exchange Risk
Shareholder Wealth Maximization
Theory of Comparative Advantage
this represents the most important objective of corporate management that managers of companies should keep in mind when the make important corporate decisions. Managers can maximize shareholder wealth by maximizing the market value of the firm.
the risk of facing uncertain future exchange rates.
the central bank of the 11 countries that make up the EMU, responsible for maintaining price stability via monetary police.
refers to a firm that has business activities and interests in multiple countries.
an agreement that supports the existence of international trade. This theory states that it is mutually beneficial for countries to specialize in the production of goods that they can produce most efficiently and then engage in trade.
permanent international organization created by the Uruguay Round to replace GATT. The WTO has the power to enforce international trade rules.
potential losses to the parent firm resulting from adverse political developments in the host country.
the economic, legal, and institutional framework in which corporate control and cash flow rights are distributed among shareholders, managers, and other stakeholders of the company.
various frictions, such as transaction costs and legal restrictions, that prevent the markets from functioning perfectly.
A multilateral agreement between member countries to promote international trade. The GATT played a key role in reducing international trade barriers.