Читать книгу Applied Mergers and Acquisitions - Robert F. Bruner - Страница 113

The field of institutional economics emphasizes the important role played in national economic growth by a range of institutions that may not themselves be the direct producers of growth but that provide important economic infrastructure for development. In developed countries, these institutions are taken for granted. But in earlier stages of development (see Exhibit 5.10), the presence or absence of these institutions and the health of the institutions will affect the attractiveness of the country for foreign direct investment and acquisition. Institutions worth studying include these:

  Banking. In the 150 developing countries of the world, banks are practically the only means by which firms can acquire nonequity funds to grow. And within the developed world, the number and health of banks vary greatly. Measures of activity and soundness of banks (and thereby the banking system) include: loan growth, deposit growth, loan losses, capitalization (and especially in comparison with capital requirements imposed by country regulators and supranational organizations such as the IMF), return on equity, return on assets, and operating ratio (operating income divided by operating expenses).

 Stock market and investment regulations. The local stock market is a bellwether of integration from local markets to the global market. Indicators of stock market conditions are the number of listings, the daily trading volume, the number of initial public offerings, the height and trend of stock prices (especially the local stock market index), presence of sophisticated institutional investors, breadth of share ownership among households within the country, and concentration of share ownership of firms. Of vital importance to integration is the presence or absence of controls on the cross-border movement of capital, restrictions on share ownership by foreigners, and generally the adoption of market regulations in harmony with world market standards.

 Watchdogs: auditors, free press, opposition political parties. Transparency of financial reporting and the adoption of accounting principles by active professional auditors in the local country are foundations of strong banking and stock market systems. But the country analyst should broaden the assessment to include other institutions that also play a watchdog role such as journalists and opposition politicians. Issues of particular importance are the suppression of governmental and corporate corruption. Some international business organizations publish corruption indexes.

 Independent judiciary, rule of law, respect for contracts and property rights. Expropriation of wealth by government or by a private mafia is the nightmare of foreign direct investors. One measure of relief from these risks is the soundness of the system of justice in the local country. Failures of the judicial system often parallel failures in watchdog groups; therefore, information in the public domain may not give a clear indication of the strength of local justice. Here, interviews with local foreign investors will be indispensable. Respect for civil rights is another indicator of the integrity of the system of justice. Give careful attention to freedom of speech, freedom of religious observance, and respect for the rights of minorities and women.

 Educational system. Literacy rates, schooling requirements, and the number and health of educational institutions give demographic backing to conclusions about the likely strength of the workforce, of human capital, and of the possible generation of new intellectual property.