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An Investment Book Review –“International Corporate Finance” by J. Ashok Robin

Well, this came as almost a treat – corporate finance, which in itself is an investment topic to be studied, on an international context. There are many textbooks on the market which study the corporate finance topics, from the main financial decisions of a corporation to financial instruments or the (in)famous weighted average cost of capital (WACC). In an international context, there are quite few study texts.
The field of International corporate finance deals with the various financial activities of international corporations or multinational companies. This book is even more focused – it concentrates on the multinational companies (MNC’s or MNE’s) and on their blood who keeps pumping and make them grow –the flow of money.
Apparently, everything is simple for a multinational company: you produce the goods or the services in one country (utilizing your muscle or the famous economies of scale), you move the goods to the consumer, cash in the money, repatriate the currency after an advantageous exchange rate transaction and mark the profits in accounting. What could be easier?
My question is – what can be less complicated? There are a myriad of issues preventing the multinational company’s operations from ending successfully – there are disruptions in the supply chain, trade barriers, exchange rate volatility is sky-rocketing, governments get broke or torn apart by revolutions, cheap supplies come all the time from India and China, derivatives are full of hidden dangers. There are so many variables in the financial game (which I call “move the money” game), that multinational companies can get it easily wrong. And the results can be quite disastrous – meaning potentially millions of dollars lost in the blink of an eye.
This is where “International Corporate Finance” might step in. This field of knowledge has grown exponentially in the last decades, together with the number of institutions and professionals serving it. So this study texts takes you quickly from the current structure of the international financial markets to the derivatives and to the global long term financing topics – all of them hot for the financial manager of today. What I liked in this book was the combination of the quantitative techniques used – you find in there everything you should know about it. Of course, if you need an in-depth treatment of a topic (such as an advanced options course) “International Corporate Finance” is not the place to look into. Yet, by putting it all together, the book offers a comprehensive view on the field.
What I also enjoyed was the extensive usage of MS Excel – most of the problems were addressed using a spreadsheet logic. This is good and bad in the same time – too often I can find in today’s multinationals the manic modeling of the questions in Excel. This leads to a false senses of security – the financial manager thinks he/she has all the answers locked in a grid, which is rarely the case. Yet, with or without the spreadsheet hell, at the end of the day a structured approach will give you statistically consistent and better answers to your problems – and I guess this is what counts.

All in all, a nice book on international corporate finance, packed with study cases.

Table of Contents
Chapter 1: Introduction
Chapter 2: International Financial Markets: Structure and Innovation
Chapter 3: Currency and Eurocurrency Derivatives
Chapter 4: Currency Systems and Valuation
Chapter 5: Currency Parity Conditions
Chapter 6: Currency Risk Exposure Measurement
Chapter 7: Currency Exposure Management
Chapter 8: Capital Budgeting
Chapter 9: Advanced Capital Budgeting
Chapter 10: Long Term Financing
Chapter 11: Optimizing and Financing Working Capital
Chapter 12: International Alliances and Acquisitions
Chapter 13: International Trade
Chapter 14: International Taxation and Accounting
Chapter 15: International Portfolio Investments

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