International Finance A Casebook

These case studies offer a unique perspective on making financial decisions in a globalizing world. The cases build the basics of understanding international financial markets - including the economics of exchange rates and international asset allocation - and then consider how firm financing and investment decisions must adapt to international circumstances. The cases provide the opportunity to consider the most critical firm financial decisions - from foreign exchange hedging strategies, the financing of multinational firm subsidiaries, cross-border valuation, to how to measure and manage the risks of operating in emerging markets. Order your copy today.

Mihir A. Desai is the Rock Center Associate Professor of Finance and Entrepreneurial Management and the MBA Class of 1961 Fellow at Harvard Business School (HBS) where he has taught since 1998. He is also a Faculty Research Fellow in the National Bureau of Economic Research's Public Economics and Corporate Finance Programs. His research on international finance and public economics has been published in leading academic journals such as the Quarterly Journal of Economics, the Journal of Finance, the Journal of Financial Economics and the Journal of Public Economics and has been cited widely in the business press. A fuller discussion of his research and publications can be found at www. people.hbs.edu/mdesai.

The cases in this book were developed for Professor Desai's second-year elective, entitled "International Financial Management," that he has taught at HBS since 2004. In addition, Professor Desai co-teaches Public Economics at Harvard College, is the Faculty Chair of the executive program on Cross-Border Financial Decision Making and has participated in numerous executive education programs at HBS. He received the Student Association Award for teaching excellence from the HBS Class of 2001. Professor Desai received h is Ph.D. in political economy from Harvard University; his MBA as a Baker Scholar from HBS; and a bachelors degree in history and economics from Brown University. in 1994, he was Fulbright Scholar to India. His Professional experiences include working at CS First Boston and advising a number of firms and governmental organizations.

Introduction

xi

PART 1 EXCHANGE RATES, MARKETS, AND FIRMS

1

(128)

Module 1.1 Exchange Rates and Global Markets

3

(3)

Foreign Exchange Markets and Transactions

6

(27)

Exchange Rate Policy at the Monetary Authority of Singapore

33

(23)

Innocents Abroad: Currencies and International Stock Returns

56

(29)

Module 1.2 Exchange Rates and Firms

81

(4)

Hedging Currency Risks at AIFS

85

(16)

Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures

101

(21)

Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures

122

(7)

PART 2 MULTINATIONAL FINANCE

129

(146)

Module 2.1. Financing Decisions Within the Firm

131

(4)

The Refinancing of Shanghai General Motors

135

(19)

Corporate Inversions: Stanley Works and the Lure of Tax Havens

154

(15)

The Continuing Transformation of Asahi Glass: Implementing EVA

169

(34)

Module 2.2 Valuing Cross-Border Investments

199

(4)

Valuing a Cross-Border LBO: Bidding on the Yell Group

203

(17)

Globalizing the Cost of Capital and Capital Budgeting at AES

220

(23)

Dow Chemical's Bid for the Privatization of PBB in Argentina

243

(32)

PART 3 CROSS-BORDER FINANCING

275

(110)

Drilling South: Petrobras Evaluates Pecom

281

(26)

Nestle and Alcon---The Value of a Listing

307

(19)

Cross-Border Listings and Depositary Receipts

326

(29)

Tax-Motivated Film Financing at Rexford Studios

355

(12)

The Strategy and Sources of Motion Picture Finance

367

(18)

PART 4 INSTITUTIONS AND FINANCE

385

(2)

Module 4.1 Finance in Weak Institutional Environments

387

(3)

Growing Up in China: The Financing of BabyCare Ltd.

390

(15)

Czech Mate: CME and Vladimir Zelezny (A)

405

(13)

Czech Mate: CME and Vladimir Zelezny (B)---CME Negotiates

418

(6)

Czech Mate: CME and Vladimir Zelezny (C)---The Struggle for Control

424

(5)

Czech Mate: CME and Vladimir Zelezny (D)---Resolution

429

(4)

Czech Mate: CME and Vladimir Zelezny (E)---CME Returns

433

(2)

Module 4.2 Regulatory Regimes

435

(3)

Antitrust Regulations in a Global Setting: The EU Investigation of the GE--Honeywell Merger

438

(16)

Redesigning Sovereign Debt Restructuring Mechanisms

454

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International Finance A Casebook

Summary

Author Biography

Table of Contents

Supplemental Materials