International Finance for AT&T
AT&T is a multinational company that operates in an abundance of countries throughout the world. This report will discuss many aspects of AT&T as a multinational company including how the global investment banking process has assisted AT&T. Discussion will also explain how the regulatory bodies affect financial decision making, identify and evaluate contemporary issues in international financial description. With AT&T operating on 6 continents throughout the world, the company has access to all financial markets, which increases AT&T’s ability to raise capital worldwide, as oppose to those companies that only operate in one country. The position that AT&T has put itself in by having operations all over the world provides the corporation with an enormous advantage over companies with limited ability to raise capital. Since AT&T is a multinational company it faces varying degrees of challenges put forth by the regulatory boards of the countries in which it does business. The contemporary issues of today can also create challenges for any company domestic, international or multinational; however, multinational companies must remain vigilant to happenings all over the world in order to remain competitive and not succumb to financial hardships based on the current issues. Global Investment Banking Process
AT&T is a huge company that has a presence all over the world. AT&T’s headquarters are located in the United States but one will find that a presence of the company exists on every continent except Antarctica. AT&T has five international divisions in addition to the United States division, which are AT&T Asia, AT&T EAMA (Europe, Middle East, and Africa), AT&T Canada, AT&T India, and AT&T Latin America/Caribbean. With having a presence in different countries, the company has access to different financial markets and can participate without any hassle because of its foreign presence. Each country has its own regulatory bodies and U.S. companies with a presence in foreign countries must follow the foreign countries’ policies.
According to Gitman, a multinational company (MNC) can raise capital in other countries. MNCs can sell shares of its stock in the markets of foreign countries; however, a major requirement is that a MNC must have a presence in that particular foreign country before the corporation can participate in any type of financial trading. The worldwide presence of AT&T subsidiaries in so many countries and the headquarters in the United States increases the corporation’s responsibility for meeting the requirements established by each of the foreign countries where a subsidiary and headquarters is located. “Many commentators agree that most MNCs would benefit enormously from an international stock market that has uniform rules and regulations governing the major stock exchanges. Unfortunately, it will likely be many years before such a market becomes a reality” (Gitman, p. 813).
Since being an MNC, companies try to stay on the good side of the foreign countries where a subsidiary or joint venture is located. MNCs generally have most of their debt in the host’s country as a way to decrease political risks. This way, if any governmental changes occur, the government will see that the MNC has contributed to their economy. By having subsidiaries in other countries, the subsidiaries get more leeway than local companies because financial institutions feels the parent company will back them up financially if any financial hardships occur. Since each country has its own currency, the Euromarket is the best market in which to invest. The Euromarket is the international financial market that provides for borrowing and lending currencies outside their country of origin (Gitman, p. 797). Businesses take an interest in the Euromarket because little government presence exists in this market. Because the Unites States have so many regulations, most companies look into foreign...
Please join StudyMode to read the full document