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Finance in a Global Context - Coggle Diagram
Finance in a Global Context
Balance of payments
Current account
Registers payments for imports and exports
Large deficit = country borrowing money
Financial account
Records financial inflows
Capital account
Records all transfers of capital
Enables us to understand comparative position of a country
Imbalances can lead to systemic problems
Tracks all transactions between individuals, firms or government bodies of a given country
Account must balance
Foreign direct investments
Aimed at securing operational control
Represent important element of global trade environment
Form of investment made by companies
Establishes plants and offices in other countries
Global Imbalances
Private sector imbalance
Global financial crisis
Public sector imbalance
Financial reporting
Stewardship
Multinational presents account of past management /establishes track record
Managing national economy
Information for investors
Seperation between manager and investor
Borrowed Finery
Borrowing legislation from other countries
Imperialism
Influence of colonial tradition and trade relations
Taxation
Transfer pricing
Arm's length principle
Obstacles to unitary taxation
Path dependency
Vested interests
Technical issues
Contingent model
Cycle in accounting regulation
All countries experience the cycle
Occurs when something disturbs perception of financial reporting operating effectively
Helps to be able to understand future evolution of accounting standards