& Multinational
Enterprises
Lee H. Radebaugh
Sidney J. Gray
Ervin L. Black
6th edition
John Wiley & Sons, Inc.
Chapter 1
International Accounting
and
International Business
Double-entry accounting
Business form
Taxation
Globalization
National Differences in
Accounting Standards
Accounting systems
Educational systems
Legal systems
Political systems
Sociocultural characteristics
Industrial Revolution
Excess capacity
Greater profit potential
Gain
sales
access to
Raw materials
Other factors of production (cheap labor)
Knowledge
New developments in technology
Forms of International
Involvement
Exports
Investment
abroad
Direct investment
Joint venture
Multinational Enterprises
Possess
Production
Sourcing of raw materials and components
Final markets
Elite
a worldwide view of
MNE
Significant
geographical spread
International experience of executives
International Accounting & Multinational Enterprises - Chapter 1 - Radebaugh, Gr
Multinational Enterprises
Firm Size and
Saturation of
Domestic Market
Probability of
International
Transactions
Small companies
Large Multinational
Enterprises
Top 10 Companies by Market Value in 2004
Source: Business Week Global 1000
Rank
Name
Country
Market Value
($ Billions)
2004
2003
General Electric
U.S.
328.11
Microsoft
U.S.
284.43
Exxon Mobil
U.S.
283.61
Pfizer
U.S.
269.66
Wal-Mart Stores
U.S.
241.19
Citigroup
U.S.
239.43
BP
Britain
193.05
10
U.S.
191.18
13
Intel
U.S.
184.66
10
8
Royal Dutch Petroleum
Netherlands
174.83
International Accounting & Multinational Enterprises - Chapter 1 - Radebaugh, Gr
Large Multinational
Top 10 Companies by Sales in 2003
Enterprises
Source: Fortune Global 500
Rank
Name
Country
Sales
($ Billions)
2003
2002
Wal-Mart Stores
U.S.
263.00
BP
Britain
232.57
Exxon Mobil
U.S.
222.88
Britain/Neth.
201.73
General Motors
U.S.
195.32
Ford Motor
U.S.
164.51
DaimlerChrysler
Germany
156.60
Toyota Motor
Japan
153.11
General Electric
U.S.
134.18
10
14
Total
France
118.44
International Accounting & Multinational Enterprises - Chapter 1 - Radebaugh, Gr
of
External environment
Internal capabilities of the firm
Environmental
constraints
Firm-specific
Environmental Influences on
Accounting
Enterprise ownership
Broad ownership
State ownership
Family ownership
Business activities influence the nature of the accounting system
Sources of finance and pressure for accountability
External shareholders
Banks
Family sources
Taxation
Accounting systems influenced by state objectives (France)
Accounting systems separate from state objectives (U.S.)
Environmental Influences on
Accounting
Developed
accounting profession
Political
Environmental Influences on
Accounting
Colonial influence
Regional trade blocs (European Union)
Professional management
Corporate Disclosure
Accounting disclosure
Accounting professionals
Consolidation
of exchanges
Exchanges in developing countries are
growing
A Wider Audience
Increased
Expectations
of nonfinance providers
Less
Accountability and
Multinational Enterprises
Demand
Host
countrys view
Accountability and
Multinational Enterprises
Domestic
Corporations
Multinational
Enterprises
Accounting Aspects of
International Business
Exposure
Importing or exporting
Costs of outside expertise
to International Accounting
Descriptive/comparative accounting
Important issues