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There are theoretical arguments in favour of evaluating a project abroad from the perspective of the parent company rather than that of the foreign subsidiary.
There are theoretical arguments in favour of evaluating a project abroad from the perspective of the parent company rather than that of the foreign subsidiary. What are these arguments?
A The performance of the subsidiary is secondary Projects in subsidiaries generate benefits only after a few years. The performance measurement is done globally. The subsidiary's results have little or no impact on consolidated results.
B The parent company is the one that invests in its subsidiary. The parent company must invest in projects that will deliver riskadjusted returns above the cost of funds, in order to create value, meet its financial obligations and meet shareholder expectations.
C The parent company must invest in projects that will deliver riskadjusted returns. The important thing is to measure financial flows at the level that will demonstrate a return that meets investors' expectations.
D The parent company must inform its shareholders and demonstrate that at the global level, the project has generated some value. Shareholders have little concern for the returns of subsidiaries abroad, as long as the MNE holds a political insurance coverage.
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