Essay on chapter 1

Submitted By sfattahian
Words: 541
Pages: 3

Shahin Fattahian
Acct – 205
Homework Chapters 1 & 2
a) As of September 30th 2014, 526 foreign companies are on the NYSE per the link below, from 47 different countries. b) Per link above, the 5 countries with the largest number of foreign companies on the NYSE are: Canada (150), China (72), Brazil (26), U.K. (32), and Bermuda (22).
c) The US is the largest economy in the world with the largest stock market, including the biggest companies with the most money. It would make it easier to purchase other companies through stock swaps and they would have the same currency (the dollar), making it easier to do business with US companies. They might also invest in the NYSE to obtain capital in the US at a more reasonable cost than is available in their home country.
Case 1-1
There are financial reporting difficulties resulting from foreign direct investment of opening the facility in China such as the conversion of foreign accounting practices to the parent companies accounting practices. There are also issues with the translation of foreign currency to the parent company currency when preparing and reporting consolidated financial statements.
There are taxation issues that arise from foreign direct investment. They will have to become experts on taxation in the country they are investing in, as well as an expert in taxation of investments in foreign countries from the investor’s home country.
There are considerations to be made for evaluating the performance of foreign operations, such as deciding which currency to evaluate performance on, and deciding whether to factor out of the performance measure, those items which the foreign operations managers have no control.
Gray’s Secrecy Hypothesis – high secrecy = high power distance, high uncertainty avoidance, low individualism, low masculinity and high long-term orientation. power distance uncertainty avoidance individualism masculinity
Long-term orientation
# matching hypothesis belgium high high high high low
brazil high high medium high high 3 korea high high low low high
netherlands low medium high low high 2 sweden low low high low low
thailand high medium low low high 3 Korea has the highest level of security, then