With regard to the financial structure of a foreign subsidiary

Question

Quizplus · Accepted Answer

The best choice is to consider all three options mentioned. While conforming to the parent company's capital structure can provide consistency and stability, conforming to the local norm can help the subsidiary operate more smoothly in the local market. However, varying the financial structure judiciously can help the subsidiary take advantage of tax benefits, reduce financing costs and risks, and exploit market imperfections. Therefore, a combination of all three options can help the foreign subsidiary achieve the best financial structure possible.

With Regard to the Financial Structure of a Foreign Subsidiary