multinationals and corporate governance

7/30/2019 Multinationals And Corporate governance

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MNEs and Risk Management:

history

723g33

[email protected]


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List of content

Multinational Enterprises (MNEs) and its

power

The case of News Corp

The importance of corporate governance

Competitive advantage vs. disadvantage of

MNEs


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Political power of multinationals

The Dutch East India Company (VOC) was the

second multinational corporation in the world,

was a chartered company established in 1602

(the first, the British East India Company, 1600). Voc is the first company to issue stock and the

largest of the early multinational companies,

possessing quasi-governmental powers, includingthe ability to wage war, negotiate treaties, coin

money, and establish colonies.


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The Shipyard of Dutch East India

Company at ca. 1750
http://en.wikipedia.org/wiki/File:VOC_duit.jpghttp://en.wikipedia.org/wiki/File:VOC.svghttp://en.wikipedia.org/wiki/File:Voc.jpg


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A bond issued by the Dutch East India Company, dating

from 7 November 1623, for the amount of 2,400 florins
http://en.wikipedia.org/wiki/File:Vereinigte_Ostindische_Compagnie_bond.jpg


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Replica of the VOC

vessel "Batavia" 1620

1629

A modern reconstruction of the 18th

century VOC Amsterdam: Nationalmaritime museum in Amsterdam
http://en.wikipedia.org/wiki/File:VOC_Amsterdam.jpghttp://en.wikipedia.org/wiki/File:Ship_Batavia_1.jpg


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Dutch East India Company

went bankrupt 1799 leaving a debt of 219

million Dutch guilders.

Changing patterns of trade and poor

governance were major contributing factors in

the demise of the VOC

The VOC failure to issue shares to raise further

capital was one of its fundamental failings.


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Legacy of the VOC: what was left? VOC offered a bureaucratic model for 19th century trading

companies in terms of integrating commercial and colonialinterests

VOC offered a paradigm for integrating a consensus and

alliance model in the home country with the utilization of the

natural and human resources of the host country Learned from VOC, Dutch legislation requires the adoption of

a 'balanced' approach to corporate management, the birth of

the stakeholder model!

Having an army in the company is not an efficient way to run acompany. Better leave it with the government.


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The downside of Multinational

Corporations

Dumping strategy. Lowering the price tocompete with small enterprises and later raiseprice,

Price subsidies by government

Endorsing bribe culture

Too big to run.

To big to fail Collusion with the local government

pollution


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The Wallstreet occupy protesters view

1. MNEs are Greedy.

2. MNEs dont follow the law. They are above

the law. Multinationals possess huge power

and huge cash.

Ex: Rupert Murdoch and News Corp

3. Corporations have no morality. As long as

there is a profit, nothing matters!

Do you agree with them?


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Rupert Murdochs Media Empire


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Rupert Murdochs Media Empire

Some facts:

1.Rupert Murdoch's family trust owns 38.4% ofvoting class B in News Corp, a company thatpublishes books, films and magazines and TVprograms.

2.The hacking scandal using illegal means to getto sensitive information. Nothing is sacred.

3.After the scandal broke out, the family tried toescape the public scrutiny.


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The controversial multinational media

mogul

Born 11 March 1931

Attended Oxford University majoring politicsand economics.

1953 left Oxford to inherit a controlling sharein News Limitedof Adelaide, Australia, uponhis fathers death.

After 3 years he was making money and couldafford to buy other media firms. One of them,the Daily Mirror.


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mogul, continues

Launched The Fox News Channelin 1996

In 2005 Murdochs News Corp. purchasedIntermix Media Incorporated, owner of the

wildly popular online socializing hub,MySpace.

Murdoch also acquired controlling interest of

IGN Entertainment, a multimedia video-basedcompany that owns websites likeAskMen,GameSpy, and RottenTomatoes.


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mogul, continues

Amid controversy, in 2007,

Rupert Murdoch put up $5.6-

billion US Dollar (USD) bid to

acquire Dow Jonesand one ofthe most well-respected

newspaper in the country.


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News Corp has it plans to invest in the

Journal's headquarters in New York andexpanding its operations in India and China.

James Murdoch: deputy chief

operating officer of News Corp
http://www.google.se/url?sa=i&source=images&cd=&cad=rja&docid=rfNXJ2y8S6vcwM&tbnid=pfjIvTjYItF2TM:&ved=0CAgQjRwwAA&url=http%3A%2F%2Fwww.guardian.co.uk%2Fmedia%2F2009%2Ffeb%2F02%2Fjames-murdoch-in-glaxosmithcline-role&ei=_ZacUc_yIaip4ASyr4CoBQ&psig=AFQjCNGf5bXe7mtC3C-cbw1iZ7Ldj2xK3g&ust=1369303165669593


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mogul, continues

While he was powerful, he also managed to

attract powerful enemies.

FOX News Network (FNN), the fair and

balanced ?

Their right wing view was known.

The slogan we report, you decide is under

attack.


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News Corp. (NWS)

-Nasdaq GS

19.63 0.05(0.26%) 25 May 21:00

Thescandal

broke

out.


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News Corporation (NASDAQ: NWS) 4:00 PM ET on May 21, 2013

Last Price Change Open Day High 52-Week High

33.37

0.20 (0.603%) 33.17 33.49 34.12

Volume Previous Close Day Low 52-Week Low

3,129,900 33.17 32.95 18.52

l b d h ll h


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James Murdoch, deputy chief operating officer of News Corp and son of chairman Rupert Murdoch,

sold $US25.1 million of nonvoting shares in the company, capitalising on a 65 per cent gain in the

stock over the past year.

Mr Murdoch sold 752,000 Class A shares at $US33.32, representing more than a fifth of his stake,according to a US Securities and Exchange filing. Mr Murdoch still owns 1,644 Class B shares, which

have voting rights in News Corp.

The sale comes ahead of a proposed split of News Corps entertainment assets from the declining

publishing business, where earnings sagged 35 per cent in the most recent quarter from the year

earlier. The companys lucrative cable-network division rose 17 per cent in sales for the period.

This is James Murdochs second-biggest stock sale in the past six months. The executive, who made$US16.8 million in salary, bonus and stock awards last year, made a gift in December of 402,260

Class A shares to his charitable foundation Quadrivium, which deals in conservation and educational

issues in developing nations.

News Corp's shares have been on a tear since the company announced in June that it would spin off

its newspapers and HarperCollins book publishing house into a separate company.

Wall Street cheered because investors had long lobbied for the senior Murdoch to exit the paper-and-ink business. The company split is expected to be complete next month.

In recent days, News Corp Class A stock hit a 52-week high of $US34.04.

Rupert Murdoch also has sold tens of millions of dollars in stock in recent months as the price

climbed.

Last weekend, Rupert Murdoch bought the Moraga Vineyard Estates in Bel Air. The 82-year-old

tycoon announced the purchase on Twitter, but he stopped short of disclosing the price. Theproperty had been listed for $US29.5 million.

Bloomberg News: James Murdoch sells News shares: May 16, 2012


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On News Corp homepage:

Corporate Governance

News Corporation's Board of Directors andmanagement are committed to strong corporate

governance and sound business practices.


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Discussion

What would be the best ownership structure ofNews Media?

(to best preserve Jounalist independence, to bestguard the public interest, etc)

What have we missed? Are journalists not theuncrowned king anymore?

The owner manager turned a blind eye on all this,is it wilful blindness?


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What to come?

There will be a lot of noise, but at the end, not

a lot of change.

-----Digby Gilmour, head of

telecommunications and media research at

C.L.S.A. Australia.


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Related readings

A good book to read:

Wilful blindness: Why We Ignore the Obvious

at Our Peril

By Margaret Heffernan


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Related sites

http://www.newscorp.com/corp_gov/index.ht

ml

http://www.youtube.com/capitalaccount

multinationals and corporate governance

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