What Is International Corporate Finance?

The only trouble with going abroad is that you have to leave home to do it.

An English aristocrat when Britannia ruled the waves!

As we enter the third millennium, information technology—by crushing the cost of communications—is accelerating the globalization of manufacturing, commerce, and especially finance. News traveling at the speed of light through the Internet reaches an estimated 250,000 computer terminals in trading rooms around the world, morphing national financial markets into one huge, efficient global marketplace for capital. Indeed, the relentless rise of the digital cyber-economy is weakening the grip of the nation-state as government policies are subjected to a continuing referendum by financial markets. And yet die-hard sovereigns are holding firmly to their prerogatives of having a national currency, a national regulatory framework, and a national tax code of their own and much more. International business's vastly expanded global reach is redefining the risks and opportunities faced by financial executives, whether they are at the helms of international trading firms; old-fashioned brick-and-mortar multinational corporations (MNCs) such as IBM, Nestlé, or Toyota; or “virtual” multinational enterprises such as Google or eBay.

In this first chapter, we explain what is unique about international corporate finance. To do so, it is helpful to sketch how the process of globalization fueled by the relentless rise ...

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