The international financial manager has the same objective as every other manager in the multinational firm: to maximize the wealth of the stockholders. If the firms stock price goes up as a result of the managers decisions, the decisions were good ones. The stockholders would recognize that the value of the company has been enhanced by the managers efforts. In order to achieve the firms primary goal of maximizing stockholder wealth, the financial manager performs three major functions: financial planning and control, the efficient allocation of funds, and the acquisition of funds on favourable terms. MNCs have superior performance over domestic companies because they enjoy a better risk-return trade-off, market imperfections, the portfolio effect, comparative advantage, internationalization advantage, economies of scale, and a higher valuation. However, when MNCs attempt to maximize their overall company value, they face various constraints, such as large agency costs, a variety of risks, conflicts of interest, and multiple environments.

Task 1

1. Evaluate how the international financial manager of a multinational firm can support to enhance the shareholder value?

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