Faculty of Commerce, Law and Management (ETDs)

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Subject: search.filters.subject.Multinational corporations

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    How to win real-life Monopoly: the roles of tax havens and finance in the monopolisation of multinational corporations
    (2022) Nadarajah, Kristin Dilani
    Much like individual income inequality, there is an increasing gap between top corporations and the rest, in terms of revenue, profits, and power more broadly. This gap is reinforced and exacerbated by the largest corporations’ ability to minimise taxes through the use of tax havens and the offshore system. There has been extensive research mapping the issue of corporate tax avoidance, as well as documenting the rise of market and monopoly power (concentration), however, there is less research combining these two. Monopoly power is thoroughly dealt with in the Monthly Review School tradition with their monopoly capital roots. Recent developments within the tradition have also incorporated finance as a key aspect of the tendency of capital to concentrate and centralise. Nevertheless, tax havens and the system around them have been excluded from this debate. This paper finds that tax havens play a crucial role in the process of concentration and centralisation of capital for three key reasons: (i) they act as a driver of financialisation which in turn accelerates the centralisation process, (ii) they provide cost minimising tools which have become central parts of capital accumulation, and (iii) they contribute to creating more opaque markets and increase the competitive advantages of the giant corporations, allowing them to increase barriers to entry. Tax havens and their usage by multinational corporations (MNCs) must therefore be seen as a systematic issue that plays a key role in not only the financial system, but also in the economy and capitalist system as a vehicle of capital accumulation in the hands of a few.
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    Financial hedging strategies of South African multinational corporations: an exploratory analysis
    (2022) Stuber, Lars
    Corporate risk management is an important element of a firm’s overall business strategy. Hedging in its various implementations forms an integral part of the firm’s corporate risk management. The main objectives of the study are to develop an overview of the financial hedging framework implemented by South African Multinational Corporations (SAMNC) using a corporate survey and to evaluate the hedging determinants for the use of complex derivatives as well as to evaluate the hedging determinants of the firm value using an ordinary least square regression. The comparison between our survey results, the survey results of South African firms by Lebata (2018) and the global survey results by Deloitte and Citi Bank shows that the South African Multinational Corporations’ hedging strategies and operations are very similar to the global hedging strategies and experiences. Due to the lack of skills in local operations, the South African Multinational Corporations have concentrated the treasury functions at the headquarters and the policies are developed centrally. The main difference is that the South African Multinational Corporations are more risk a verse when evaluating and using derivative instruments. Mainly forwards with tenures up to 12 months are used. Only one South African Multinational Corporation used complex derivatives. But the firms adhere to the strict framework developed by the South African regulatory authorities and international standards. Surprisingly, we found a mismatch between the product portfolio offered by South African financial institutions and the hedging requirements of the surveyed firms. The financial institutions offer spots, forward, futures, swaps and options. Generally, South African Multinational Corporations do not require or use options and futures for developing currencies. We conclude that there is a great potential to expand the use of the available products, but it requires substantial education of the treasury departments. The results of the regression for the use of complex derivatives (UCD and CPX) show a positive significance at the 5% level for the determinant long-term debt to total assets (LTAS). LTAS describes the financial distress level. The remaining determinants do not show any significant influence on the use of derivatives. Whilst not significant, the positive sign of the determinant ‘use of complex derivatives’ (UCD) of the dependent variable market-to-book ratio (MB) representing firm value would indicate that the use of complex derivatives increases the firm value compared to the use of simple, plain vanilla derivatives. This is similar to previous studies which compared firms not using derivatives at all with firms using derivatives.