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    Internationalization of Global Finance

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    Respond to following statements
    1. What contemporary factors are contributing to the internationalization of the subject of Finance?
    The factors contributing to the internationalization of the subject of finance include the increasing number of cross-border mergers and acquisition that occur in information technology and the internationalization of the worlds capital markets. Firms can gain from greater economics of scale when their tangible and intangible assets are deployed on an international basis. The international equities market is one global capital market, such market covers foreign exchange transactions that is when one national currency is exchanged into, traded forward, hedged, swapped or converted into another national currency.

    Privatization of state owned corporations have dramatic effects on global capital markets, where they compete in the marketplace for market share, external capital and corporate control.
    2. What contemporary factors are contributing to the internationalization of the subject of Finance?
    there are many factors contributing to the internationalization of the subject of finance but I do believe that one of the main reasons for this is globalization throughout world markets. We see an expanded opportunity set where companies no longer limit themselves to their home country but can potentially do business in every country throughout the world (Eun & Resnick, 2015). Globalization has led to an explosion in the international markets as we have seen unprecedented growth (especially in China where we have seen double digit growth almost consistently over the last decade). With the globalization of the world economy companies could have sales in the United States, marketing in Sweden, and manufacturing in Mexico while still being able to be competitive against their rivals.
    3. What contemporary factors are contributing to the internationalization of the subject of Finance?
    There are many contemporary factors that are contributing to the internationalization of the subject of Finance. Here in the United States we purchase and consume oil from Saudi Arabia and Nigeria, televisions from Korea, vehicles from Germany and Japan, garments from China, shoes from Indonesia, handbags from Italy and wine from France. This is just a start to the list. In return, the United States sells aircraft's, software, movies, jeans, smart phones and many other products to other country's . For these transactions to take place and for companies to remain successful in selling from country to country, the subject of finance needs to be looked at on an international scale. International finance is different than regular finance because of three main factors.

    1) Foreign exchange and political risks.
    2) Market imperfections.
    3) Expanded opportunity set

    It is key that people involved in finance of these companies are very well trained and knowledgeable of these differences.
    4. Are national differences in finance practice better explained by culture or by economic and legal factors? Why?
    Culture does not seem to matter, good governance is seen as a prerequisite of development laws must be clearly promulgated and enforced so that contractual agreements will be honored. Some ethic groups seem to be more successful in businesses than others.
    The differences of cultural between nations recognized as a significant influencing factor on reporting and disclosure performance with regard to financial statements. A country's legal system has a direct impact on accounting, it determines the primary sources of accounting rules which can be developed by the government.
    5. Are national differences in finance practice better explained by culture or by economic and legal factors? Why?
    National differences in finance practice would better be explained by economic and legal factors than that of culture. Culture would probably take a back seat to economic and legal factors due to how culture within a nation directly impacts financial development. Economic and legal factors would appear to be more clearly related to the precise features of finance practices whereas cultural variables are linked more to a broader generalization about finance. Economic and legal factors can more easily explain national differences in finance practice than culture would be.

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    Solution Preview

    Respond to following statements
    1. What contemporary factors are contributing to the internationalization of the subject of Finance?
    The factors contributing to the internationalization of the subject of finance include the increasing number of cross-border mergers and acquisition that occur in information technology and the internationalization of the worlds capital markets. Firms can gain from greater economics of scale when their tangible and intangible assets are deployed on an international basis. The international equities market is one global capital market, such market covers foreign exchange transactions that is when one national currency is exchanged into, traded forward, hedged, swapped or converted into another national currency.Privatization of state owned corporations have dramatic effects on global capital markets, where they compete in the marketplace for market share, external capital and corporate control.

    Internationalization of the subject of finance is internally linked to globalization wherein globalization has driven the necessity for previously "closed-off" financial markets to become a part of the international finance system. One of the most striking examples would be China, which has gradually become one of the most important financial markets in the world, but only 40 years ago was not even a part of the international market. The recent crash of the Chinese stock market has resulted in turmoil across global financial markets, which occurred as a result of globalization wherein China was mandated to open their previously closed markets to the world over the last 4 decades because of globalized business ventures that have witnessed the Chinese enter into every corner of the globe.

    2. What contemporary factors are contributing to the internationalization of the subject of Finance?
    there are many factors contributing to the internationalization of the subject of finance but I do believe that one of the main reasons for this is globalization throughout world markets. We see an ...

    Solution Summary

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