Financial Management Essay

1377 WordsMay 7, 20136 Pages
Financial Management in Multinational Organizations A Paper Submitted in Partial Fulfillment of the Requirements for MGMT 640 Financial Decision Making for Managers In the College of Arts and Sciences in the College of Graduate Studies March 28, 2010 Executive Summary Financial management involves managing the finance related activities of an organization. Financial management activity assumes great significance in case of a multinational corporation. Efficiently managing financial resources across global locations becomes imperative in the aforesaid case. A multinational organization has operations in more than one nation. MNC performance examines the relationship between market valuation of MNCs and intangibles associated with financial expertise. We identify firms as having financial expertise if they have diversified their business in the financial sector. We argue that financial expertise enhances the ability of MNCs to internalize financial transactions and take advantage of financing and investment opportunities around the world. Therefore, it is a potentially significant source of market power. Our test results demonstrate that as the degree of multinationality increases, market valuation is positively related with financial expertise even after we account for several other control factors. Findings imply that MNCs with financial expertise can be viewed as possessing an additional intangible, which essentially is the financial equivalent of the traditionally examined intangible assets, such as technological “know-how,” goodwill, and managerial expertise. Multinational corporations are business entities that operate in more than one country. The typical multinational corporation or MNC normally functions with a

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