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

Questions Cloud

What is the nash equilibrium or equilibria in the game : What is the Nash equilibrium or equilibria in this game? What is a first-mover advantage? Does BP have a first-mover advantage in this game? Use the above information to advise BP on whether they should pursue a merger with Shell.
Determining the dividend payout ratio : If Colgate's equity  cost of capital is 9.4% per year and its dividend payout ratio remains constant, what price does the dividend discount model predict Colgate should sell for?
Move forward with an investment decision : Discuss three steps in the capital investment financial analysis: cash flow estimation, project risk assessment, and cost of capital estimation. How might each of these influence a health care manager's decision to move forward with an investment ..
Review this week learning resources as well as the stress : When doctors diagnose a patient's mysterious pains, sudden sleep difficulties, changes in eating habits, inexplicable migraines or excessive fatigue as psychosomatic, it is easy to apply the layman's translation of "It's all in your head." However..
Discourage certain large foreign companies : 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. GA..
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. Assuming perfect capital markets and a corporate tax rate of zero, calculate:
How can psychological research and theories : Prescription Drug Abuse Among Rural Teens: How can psychological research, theories, and perspectives be used to reduce prescription drug abuse among rural teens?
What is the purpose of regression : What is the purpose of regression
Determine the probability that the test will conclude cost : Determine the probability that the test will conclude the cost of owning a car in Los Angeles is not more than 10% less than in Detroit when in fact the average cost is $10,361.

Reviews

Write a Review

Finance Basics Questions & Answers

  What would be the contracts new value

What is the implied interest rate on a Treasury bond ($100,000) futures contract that settled at 100'16? If interest rates increased by 1%, what would be the contracts new value? Answer according to book is Rd= 5.96% but I dont know how they arriv..

  Disadvantages of financial statement analysis

Discuss the advantage and disadvantages of financial statement analysis. How can it help a manager make decisions and how might it mislead you? (Response should be a minimum of 400 words).

  The discount rate is 10 what is the investments value at

a real estate investment has the following expected cash flowsyear cash flows1 100002 250003 -15500the discount rate is

  What is the maximum net gain

A trader creates a long butterfly spread from options with strike prices $60, $65, and $70 by trading a total of 400 options. The options are worth $11, $14, and $18. What is the maximum net gain (after the cost of the options is taken into accoun..

  What amount of child and dependent care tax credit

What amount of child and dependent care tax credit can they claim on their Form 1040? How would it differ if the couple had an AGI of $36,00 earned entirely by John.

  Investment advisor misleads clients

This question is from Finance and it explains a scenario where an investment advisor misleads his clients in investing in a company's shares whose prices have been falling.

  What is penn trucking cost of retained earnings

Analysts expect Penn Trucking's dividends to grow by 6% per year for the foreseeable future. Using the capital asset pricing model, what is Penn Trucking's cost of retained earnings?

  Financial reports are included in the annual report

What financial reports are included in the annual report? What are the major types of information contained in each of these reports? What is a Form 10-K? What information can be found in a Form 10-K document that could not be found in an annua..

  The companys cost of borrowing is 9 and its weighted costof

the companys cost of borrowing is 9 and its weighted costof capital is 14. calculate the modified internal rate of

  Should you accept or reject the project

A project has the following cash flows. Knowing that the required rate of return is 15%, should you accept or reject the project?

  Based on the financial information of the 10 discount rate

sharon smith will receive 1 million in 50 years. the discount rate is 10. as an alternative she can receive 5000

  Prepare an income statement and an owner equity

Prepare an income statement and an owner's equity statements for the 3 months ending in the August 31.

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