Corporate Finance

Abstract

Our modern capital markets are of global proportions. An investor in Sydney can buy shares in a Japanese, American or British corporation as easily as she can in an Australian one. Similarly, she may invest in a shipping enterprise, a property firm or a computer company, such is the diversity of opportunity. The broadening and restructuring of international financial markets over the last half century and the accompanying information technology revolution have made this possible. Corporations themselves think globally when seeking new investment or acquisition opportunities. Good investment decisions, by the institutional or private investor, however, require effective information channels. Vast quantities of information have become easily accessible particularly through the internet. However, as we saw in Chapter 3, the bounded rationality of the human mind means the investor’s task of selecting good-quality, reliable information may be no easier than in the past and perhaps more difficult. For companies seeking new or additional finance, signalling their worth also becomes more difficult in a crowded market.