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.