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Foreign Direct Investment Theory and Political Risk

Foreign Direct Investment Theory and Political Risk. 723g33 Yinghong.chen@liu.se. Political power of multinationals. The Dutch East India Company was the second multinational corporation in the world, was a chartered company established in 1602 (the first, the British East India Company ).

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Foreign Direct Investment Theory and Political Risk

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  1. Foreign Direct Investment Theory and Political Risk 723g33 Yinghong.chen@liu.se

  2. Political power of multinationals • The Dutch East India Company was the second multinational corporation in the world, was a chartered company established in 1602 (the first, the British East India Company). • the first company to issue stock and the largest of the early multinational companies, possessing quasi-governmental powers, including the ability to wage war, negotiate treaties, coin money, and establish colonies.

  3. The downside of Multinational Corporations • Dumping strategy. Lowering the price to compete with small enterprises and later raise price, • Price subsidies by government • Endorsing bribe culture • Too big to run. • To big to fail • Collusion with the local government • pollution

  4. The Wallstreet occupy protester’s view • MNEs are Greedy. • MNEs don’t follow the law. They are above the law. Multinationals possess huge power and huge cash. Ex: Rupert Murdoch and News Corp • Corporations have no morality. As long as there is a profit, nothing matters! Do you agree with them?

  5. Rupert Murdochs Media Empire

  6. Rupert Murdochs Media Empire Rupert Murdoch's family trust owns 38.4% of voting class B in News Corp, a company that publishes books, films and magazines and TV programs. “The hacking scandal” using ilegal means to get to sensitive information Tried to escape the public scrutiny.

  7. The controversial multinational media mogul • Born 11 March 1931 • Attended Oxford University majoring politics and economics. • 1953 left Oxford to inherit a controlling share in News Limited of Adelaide, Australia, upon his father´s death. • After 3 years he was making money and could afford to buy other media firms. One of them, the Daily Mirror.

  8. The controversial multinational media mogul, continues • launched The Fox News Channel in 1996 • In 2005 Murdoch’s News Corp. purchased Intermix Media Incorporated, owner of the wildly popular online socializing hub, MySpace. • Murdoch also acquired controlling interest of IGN Entertainment, a multimedia video-based company that owns websites like AskMen, GameSpy, and RottenTomatoes.

  9. The controversial multinational media mogul, continues Amid controversy, in 2007, Rupert Murdoch put up $5.6-billion US Dollar (USD) bid to acquire Dow Jonesand one of the most well-respected newspaper in the country.

  10. News Corp has it plans to invest in the Journal's headquarters in New York and expanding its operations in India and China.

  11. The controversial multinational media 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.

  12. News Corp. (NWS) -Nasdaq GS 19.63 0.05(0.26%) 25 May 21:00

  13. On News Corp homepage: Corporate Governance “News Corporation's Board of Directors and management are committed to strong corporate governance and sound business practices.”

  14. discussion What would be the best ownership structure of News Media? (to best preserve Jounalist independence, to best guard the public interest, etc) What have we missed? Are journalists not the uncrowned king anymore?

  15. 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.

  16. Related readings A good book to read: Wilful blindness: Why We Ignore the Obvious at Our Peril By Margaret Heffernan

  17. Related sites • http://www.newscorp.com/corp_gov/index.html • http://www.youtube.com/capitalaccount

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