This Theory Held That Firms Will Rather Invest in Host

question 47

Multiple Choice

This theory held that firms will rather invest in host countries that are relatively close to it culturally and that they were likely to be more successful in such relatively familiar environments.

• A) Familiarity theory
• B) Global integration
• C) both a & b
• D) none of the above

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Definitions:

Equity Method

An accounting technique used by companies to record their investments in other companies, adjusting the investment for the investor's share of the investee's profits or losses.

Consolidated Inventory

The total value of all inventories held by a parent company and its subsidiaries, accounted for in a consolidated financial statement.

Unrealized Inventory Profits

Profits that are reported on paper through an increase in inventory value but have not yet been realized through sales.

Significant Influence

Significant Influence is the ability of an investor to affect the financial or operating policy decisions of the investee through ownership, contracts, or other means, short of full control or joint control.