The difficulties of moving to foreign country
Assignment 4: Discuss the benefits of a
US company moving its headquarters to another country and listing their stock
only on a foreign stock exchange. Give specifics: Which country? Which stock
exchange? Why is this a good idea? Why is it not a good idea? Note that the
company would not be seeking a “tax haven.” Make a recommendation!
The difficulties of moving
to foreign country
Yoichi Horibe
Moving whole business to other country is great idea but it would be hard
except if we could find foreign customer who exclusively needs our service or product.
Accenture which is one of famous American consulting
company would be one of the examples. Accenture’s headquarter is located in
Ireland. The effective statutory tax rate
of Ireland is lowest in the world. However, their top management team is
actually only in New York and Canada and they belong to NYSE because they can’t
find stakeholder in Europe.
Many American companies move to other country in order
to avoid corporate tax and don’t list with foreign exchange. If they list in
foreign country, they would have to gain a profit only from the country. There
is also currency risk and they have to consider how employees receive salary.
This is the reason why Fortune 500 companies don’t list in Europe even if their
headquarters are located in Europe.
Another example, Samsung is listing with Korea,
London, and Luxemburg Stock Exchange but headquarter is in Korea. Samsung is
different from them because their main profit is from Europe. It’s over
40%.
Singapore is also one of tax haven. Last year, one of
Facebook’s institutional investor moved to Singapore with his stocks. Cayman
Island is most famous place as tax haven. A lot of hedge fund has paper
companies in this place.
In conclusion, if the company aren’t seeking tax
haven, this would be bad idea. Even audit company such as Accenture is using EU
headquarter as tax haven. Company need to maximize stakeholder’s profit. To do
that, company has to use tax haven. Moreover, to list with foreign exchange is
good idea but there are some risks that global managers have to consider
deeply. Samsung is successful case but there is no meaning to go private in
Korea.
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