Accounting exposure, also known as translation exposure, is the risk that a company's financial statements can be affected by exchange rate fluctuations when the company has foreign subsidiaries or international dealings.
A company incorporated under the laws of a foreign country regardless of where it operates. 'Alien corporation' can be synonymous with 'foreign corporation,' but the latter can also refer to a corporation formed in a different U.S. state than where it conducts business.
Brain drain refers to the migration of highly skilled and educated individuals from one country to another, often in search of better career prospects, living conditions, or educational opportunities.
Capital outflow refers to the exodus of capital from a country, driven by a combination of political and economic factors. Domestic and foreign owners of assets may sell their holdings and relocate their money to countries with more political stability and economic growth potential. Large capital outflows may prompt countries to impose currency controls or other measures to restrict the movement of money.
A Concession Agreement is a contract between a host government's government and a foreign firm that outlines the terms under which the firm will invest in the host country, covering aspects like taxes, profit remittance, and ownership transfer.
Confiscation risk refers to the potential threat that assets held in a foreign country could be seized, expropriated, or nationalized by the host country's government. This risk also includes the possibility of interference with a non-resident owner's control over these assets.
A currency for which there are no barriers or restrictions in the foreign exchange market, allowing it to be freely exchanged for other currencies.
Country screening involves using countries as the basic unit of analysis for market evaluation, allowing businesses to identify the most favorable markets for their products or services.
Currency futures are contracts in the futures markets for delivery in a major currency such as U.S. dollars, Euros, or Japanese yen. Corporations that sell products globally can hedge against adverse exchange rate movements using these futures.
An exchange rate is the price of one currency in terms of another currency. It is a crucial element in the global economy, impacting international trade, investments, and the purchasing power of consumers.
The Export-Import Bank of the United States (EXIM) is a government agency established by Congress in 1934 to encourage U.S. trade with foreign countries through various financing programs and risk mitigation services.
FIT Investment refers to Foreign Investment Tax, a concept that pertains to the taxation policies applied to foreign investments within a host country. This concept is crucial in international business and taxation.
Foreign companies are corporations or businesses that are registered, operate, or have authorization to conduct commercial activities in a country other than their country of origin. These entities are important players in the global economy and international trade.
A foreign corporation is a legal entity that is registered outside the state or country in which it primarily conducts business. It is important to distinguish between out-of-state corporations and alien corporations.
The Foreign Corrupt Practices Act (FCPA) is a United States legislation enacted in 1977 designed to prevent bribery and corruption by U.S. companies in their overseas operations. A 1998 amendment extended its scope to include actions by foreign citizens and companies while on U.S. territory.
Foreign Currency Translation is the process of expressing amounts denominated in one currency in terms of another currency using the exchange rate between the currencies. Assets and liabilities are translated at the current exchange rate as of the balance sheet date, while income statement items are typically translated at the weighted-average exchange rate for the period.
Foreign Direct Investment (FDI) refers to the investment made by a foreign entity into a business or production in another country. This often involves acquiring control or significant ownership of a company in the target country.
The Foreign Tax Credit (FTC) is a credit allowed against U.S. income taxes for foreign taxes paid on income earned overseas. It helps to mitigate the double taxation of income that is taxable both in the U.S. and by a foreign country.
An economic policy where governments do not restrict imports or exports through tariffs, quotas, or subsidies, allowing unrestricted flow of goods between countries.
In various domains such as business law, taxation, and international business, the term 'GOV' refers to governmental bodies, regulations, or actions pertaining to public policies, administrative systems, and regulatory frameworks that impact businesses, individuals, and the economy.
Import duty is a type of tax levied by a government on goods brought into the country from abroad. It is aimed at regulating international trade, protecting domestic industries, and generating revenue for the government.
International Commercial Terms, or Incoterms, first published in 1936 by the International Chamber of Commerce to promote standardized terminology for international trade.
International Financial Reporting Standards (IFRS) are a set of accounting standards developed and maintained by the International Accounting Standards Board (IASB). They aim to provide a common global language for business affairs so that company accounts are understandable and comparable across international boundaries.
Madison Avenue is a famous avenue in New York City historically known as the hub of the advertising industry, housing major advertising agencies. While many agencies have expanded nationally and internationally, they maintain a significant presence in New York City.
A managed float, also known as a dirty float, is an exchange rate system where a currency’s value is primarily determined by market forces but is also occasionally adjusted by the central bank to stabilize or reach specific targets.
A manufacturing operation at the U.S.-Mexican border, usually comprising two plants on either side of the border, designed to capitalize on free trade benefits, low Mexican wages, and U.S. distribution facilities.
Market screening is a method of scanning for desirable markets based on environmental factors that help preclude undesirable markets. It is commonly used in international business strategy to evaluate potential markets effectively.
A corporation that has production facilities or other fixed assets in at least one foreign country and makes its major management decisions in a global context; sometimes called transnational corporation.
A Multinational Enterprise (MNE) is a company that has facilities and other assets in at least one country other than its home country. This typically includes offices or factories, as well as a centralized head office where they coordinate global management.
A corporation that has production operations in more than one country for reasons such as securing raw materials, utilizing cheap labor, servicing local markets, taking advantage of tax differences, and bypassing protectionist barriers.
An offshore company is a business entity not registered in the same country as that of its funding residents or it's an entity established in a foreign country, often a tax haven, for capitalizing on specific tax laws and exchange control regulations.
The term 'offshore' refers to financial organizations with headquarters outside their primary country of operation or to oil and gas drilling ventures in the sea. Offshore activities are significant in both finance and energy sectors.
An open-door policy is a management practice that encourages open communication between employees and management, and a national trading stance that ensures equal treatment for foreign and domestic entities.
A financial arrangement in which two independent firms with subsidiaries in separate countries make offsetting loans to each other's subsidiaries to hedge against exchange rate fluctuations.
An abbreviation for proprietary company, used primarily in Australia and the Republic of South Africa to denote private limited companies.
Repatriation involves the movement of financial assets or profits of an organization or individual from a foreign country back to their home country, often for investment or distribution purposes.
S.A. refers to a corporate structure commonly used in Spanish-speaking and French-speaking countries. It is equivalent to a corporation (Inc.) in the United States or a public limited company (PLC) in the United Kingdom.
Transnational refers to activities, processes, or phenomena that extend beyond national boundaries. This term is often used in the context of business, law, communications, and socio-political movements, among others.
A weak dollar refers to a situation where the value of the U.S. dollar has fallen relative to other foreign currencies. This results in the dollar’s decreased purchasing power in comparison to other currencies such as the pound, yen, euro, or francs.
