Multinational cash management and conglomerate discounts in the euro zone |
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| Institution: | 1. Department of Microbial Infection and Immunity, College of Medicine, The Ohio State University, Columbus, OH, 43210, USA;2. Infectious Diseases Institute, The Ohio State University, Columbus, OH, USA;3. Department of Internal Medicine, College of Medicine, The Ohio State University, Columbus, OH, USA;4. Texas Biomedical Research Institute, San Antonio, TX 78227, USA |
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| Abstract: | We discuss the impact of liberalisation, deregulation and the introduction of a single currency on cash management within multinationals in the euro zone. The developments in the euro zone reduce financial market imperfections in transferring cash and diminish the need for separate local cash holdings. This facilitates the centralisation of cash management and headquarters’ financial control. Increased financial power of multinational headquarters, moreover, offers opportunities for disintermediation. By exploiting these options multinationals in the euro zone can start to reap additional benefits of internal financing and conglomerate discounts of euro zone multinationals may diminish. |
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