Discourage certain large foreign companies

Assignment Help Finance Basics
Reference no: EM131097085

The takeover battle for Gerber Products Co. included bids by a number of U.S. companies, including Quaker Oats (now part of PepsiCo), which entered a bid of $35 per share. Swiss drug giant Sandoz Ltd. won the battle quickly, however, by raising the ante to $53 per share. Some investment bankers claimed that the favorable accounting treatment for acquisitions practiced in Switzerland gave Sandoz the advantage it needed to outbid Quaker Oats.

Accounting differences also seem to discourage certain large foreign companies from raising capital on the U.S. stock exchanges. For example, Nestle, a Swiss food giant, says it is not willing to redo its financial statements to conform to U.S. GAAP (a requirement of the U.S. stock exchanges). Some offer that the main reason is that its earnings would look much lower.

Accounting differences across countries have elicited complaints from U.S. businesses that certain foreign countries allow liberal accounting methods that provide unfair trade advantages for their local companies and capital markets.

Is it ethical for the government or stand-setting body in a particular country to set accounting standards that are designed to provide international economic advantages enjoyed solely by the companies and capital markets in that country?

Reference no: EM131097085

Perfect capital markets and corporate tax rate of zero

Expected earnings (EBIT) generated by the firm's assets are $3,000,000 per year and expected to continue into perpetuity. Assume agency and bankruptcy costs are zero. a. Ass

Estimate of the current stock price

There are 7.1 million shares of stock outstanding and investors require a return of 13 percent on the company's stock. The corporate tax rate is 39 percent. a. What is your

Cost of equity after the switch

The Border Crossing has no debt and a cost of capital of 11.2 percent. Assume the firm switches to a debt-to-equity ratio of .25 and issues bonds at par with a 6.3 percent c

Shareholders equity account

Sankey, Inc., has current assets of $5,125, net fixed assets of $25,600, current liabilities of $4,500, and long-term debt of $9,900. (Do not round intermediate calculations

Determining the dividend yield

One year ago, you purchased 300 shares of IXC stock at a price of $22.05 per share, received $460 in dividends over the year, and today sold all of your shares for $29.32 pe

Bond yield to maturity

1. Suppose a 10 year, $1000 bond with a 11% coupon rate and semiannual coupons is trading for the price of 907.37 a) What is the bond yield to maturity (EXPREES as an APR wi

Is the stock a good or bad buy

A share of stock with a beta of .83 now sells for $61. Investors expect the stock to pay a year-end dividend of $3. The T-bill rate is 6%, and the market risk premium is 9%.

Expected rate of return on the market portfolio

Suppose you believe that the beta of the firm is .7. How much is the firm worth if the risk-free rate is 2% and the expected rate of return on the market portfolio is 13%? (


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd