An Introduction to the International Financial Management Course at Harvard Business School

1
An Introduction to the International Financial
Management Course at Harvard Business School

• CODRE Seminar
• November 2004
• Mihir A. Desai

2
The Overall Structure of the Course

• 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

3
What types of cases are there in this 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

4
What parts of the world do these cases cover?

• 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

5
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

6
Foreign Exchange Markets and Transactions
7
Exchange Rate Policy at the Monetary Authority of
Singapore
8
Innocents Abroad Currencies and International
Stock Returns
9
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

10
Hedging Currency Risks at AIFS
11
Foreign Exchange Hedging Strategies at General
Motors Transactional and Translational Exposures
12
Foreign Exchange Hedging Strategies at General
Motors Competitive Exposures
13
The Refinancing of Shanghai General Motors
14
Corporate Inversions Stanley Works and the Lure
of Tax Havens
15
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 Chemicals 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

16
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 intl setting,
  Japanese corporate governance

17
Valuing a Cross-Border LBO Bidding on the Yell
Group
18
Globalizing the Cost of Capital at AES
19
Dow Chemicals Bid for the Privatization of PBB
in Argentina
20
Drilling South Petrobras Evaluates Pecom
21
Nestle's Spinoff of Alcon (with Cross-Border
Listings and Depositary Receipts)
22
Tax-Motivated Film Financing at Rexford Studios
23
Implementing EVA at Asahi Glass
24
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

25
Growing Up In China The Financing of BabyCare
26
Czech Mate CME and Vladimir Zelezny (cases A-D)
27
Antitrust Regulations in a Global Setting The
EU Investigation of the GE/Honeywell Merger
28
Financing Biodiversity Conservation by the Global
Conservation Fund
29
Redesigning Sovereign Debt Restructuring
Mechanisms