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Why should financial comparisons of multi-national companies with subsidiaries in different countries be undertaken with caution?
Member rating: No Rating | Words: | Submitted: Wed Apr 07 2004
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Why should financial comparisons of multi-national companies with subsidiaries in different countries be undertaken with caution? A multinational corporation (MNCs) is, "an international or transnational company with its headquarters in one country but branch offices in a wide range of both developed and developing countries"1 It is generally accepted that a MNC involves producing and selling goods in several different countries. The expansion of corporations internationally tends to be one of the most important goals for continuing success. The creation of a subsidiary in a new country creates many problems for the corporation. Consideration will be given to both internally and externally financial reporting problems. The focus of this essay will be on the language, currency, Accounting Standards and external audit problems and why caution has to be taken when comparing MNCs. For MNCs, deciding on what language to use for reporting purpose can be a problem, this is because each...
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