An Introduction to the International Financial Management Course at Harvard Business School CODRE Seminar November 2004 Mihir A. Desai
Module II – Multinational Finance AIFS Hedging GM Hedging (1) GM Hedging (2) Shanghai GM Refinancing Stanley Inversion Module IV – Institutions and Finance Financing Babycare Czech Mate EU - GE/Honeywell Global Conservation Fund IMF-Sovereign Debt Restructuring Mechanism Module I – Exchange Rates and Asset Prices Foreign Exchange Problem Set Monetary Authority of Singapore Innocents Abroad Module III – Cross-Border Valuation and Financing Yell Buyout (2 days) AES Cost of Capital Dow Quimica – PBB Privatization Petrobras – Pecom Acquisition Rexford Film Financing Nestle-Alcon (not approved) Asahi Glass – EVA The Overall Structure of the Course
Library Case Czech Mate EU - GE/Honeywell (started with interview but too sensitive) Foreign Exchange Problem Set IMF-Sovereign Debt Restructuring Mechanism (started with interview but too sensitive) Innocents Abroad (started as Field) (fictional protagonist) Petrobras – Pecom Acquisition (started with interview but changed leadership) Rexford Film Financing (fictional protagonist) Stanley (contact with company but too sensitive) (fictional protagonist) Field Case AES Cost of Capital AIFS Hedging Asahi Glass - EVA Dow Quimica – PBB Privatization Financing Babycare Global Conservation Fund GM Hedging (1) GM Hedging (2) Monetary Authority of Singapore Nestle-Alcon (not approved) Shanghai GM Refinancing Yell Buyout What types of cases are there in this course?
US Stanley Inversion Latin America Dow Quimica – PBB Privatization Petrobras – Pecom Acquisition Europe AIFS Hedging Czech Mate EU - GE/Honeywell Nestle-Alcon Spinoff (not approved) Rexford Film Financing (US setting) Yell Buyout Worldwide AES Cost of Capital (US setting) Foreign Exchange Problem Set Global Conservation Fund (US setting) GM Hedging (1) (US setting) GM Hedging (2) (US setting) IMF-Sovereign Debt Restructuring Mechanism (US setting) Innocents Abroad (US setting) Asia Asia Asahi Glass - EVA Financing Babycare Monetary Authority of Singapore Shanghai GM Refinancing What parts of the world do these cases cover?
MODULE 1 – Exchange Rates and Asset Prices • Foreign Exchange Markets and Transactions • Foreign exchange market basics; mechanics; economics • Exchange Rate Policy at the Monetary Authority of Singapore • Determinants of exchange rates, real exchange rates, monetary policy, exchange rate regime choice, trilemma • Innocents Abroad: Currencies and International Stock Returns • Currencies and equity returns, home-bias, mean-variance analysis of optimal portfolios
MODULE 2 –Multinational Finance • Hedging Currency Risks at AIFS • Measuring exposures; alternative hedging instruments, options vs. forwards • Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures • Hedging policy,impact of FX changes on financial statements • Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures • Impact of FX changes on competitiveness • The Refinancing of Shanghai General Motors • Issues in structuring and financing overseas ventures • Corporate Inversions: Stanley Works and the Lure of Tax Havens • U.S. taxation of foreign operations
Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures
Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures
MODULE 3(i)– Cross-Border Valuation and Financing • Valuing a Cross-Border LBO: Bidding on the Yell Group • DCF methods for multiple currencies, CCF vs. APV • Globalizing the Cost of Capital at AES • Country risk adjustments in capital budgeting, leverage and discount rates • Dow Chemical’s Bid for the Privatization of PBB in Argentina • Country risk adjustments in acquisitions, multinational behavior in currency crises, distributional consequences of crises • Drilling South: Petrobras Evaluates Pecom • Consequences of extreme outcomes in exchange rate markets, valuation across emerging markets, politics and finance
MODULE 3(ii)– Cross-Border Valuation and Financing • Nestle's Spinoff of Alcon and Cross-Border Listings and Depositary Receipts (Note) • Capital markets listing options, clienteles • Tax-Motivated Film Financing at Rexford Studios • Transaction driven by tax arbitrage, clienteles in international settings • Implementing EVA at Asahi Glass • Economic Value Added analysis in int’l setting, Japanese corporate governance
Nestle's Spinoff of Alcon(with Cross-Border Listings and Depositary Receipts)
MODULE 4 – Institutions and Finance • Growing Up In China: The Financing of BabyCare • Venture capital/entrepreneurial finance in emerging markets • Czech Mate: CME and Vladimir Zelezny • Investor protections and finance, expropriation, cross-border protections • Antitrust Regulations in a Global Setting: The EU Investigation of the GE/Honeywell Merger • Impact of multiple regulators in cross-border settings, IO of mergers • Financing Biodiversity Conservation by the Global Conservation Fund • Applications of financial tools in other contexts, Debt swaps • Redesigning Sovereign Debt Restructuring Mechanisms • Sovereign bankruptcies
Antitrust Regulations in a Global Setting: The EU Investigation of the GE/Honeywell Merger
Financing Biodiversity Conservation by the Global Conservation Fund