Global Investors Case

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ACCT 463 Management Control Global Investors, Inc. Case Summary Shaoxiong Zhang 260558334 Professor Philippe Levy February 9, 2016 Introduction Global Investors Inc., founded in 1965, was a private owned investment management company headquartered in New York. The firm mainly focuses on two activities: investment management (which included research, portfolio management, and trading) and client services (which included marketing and investor advisory services provided to institutional investors and independent brokers/dealers). Objectives As a large investment management firm, one of the Global Investors Inc.’s objectives is to increase profits. Also, the company wants to implement new efficient…show more content…
In each subsidiary, employees initiate the development of a local research function as policy tailoring to meet local customers’ needs. Management controls There are both action and result controls in the Global Investors. First, headquarters dominate the trading strategies; its research team in New York specifies actions required to take on how to trade its assets or equities. As for result controls, Global Investors has a compensation committee (comprising three members of the board of directors and the vice president of human resources) to evaluate its managers. The committee assigned bonus points to managers based on their performance and contributions, and then they allocate a bonus pool based on Global Investors’ profits to managers according to their bonus points. Under current transfer pricing model, Global Investors treat subsidiaries as cost-focused profit centers. It allocate subsidiaries’ revenues based on subsidiaries’ direct controllable cost plus 10% mark-up, this ensure every subsidiary is making a profit so that it comply with local regulations. Problems For the current transfer pricing model, each subsidiary is seem to have a slight profits, there is a risk that tax authorities could find subsidiaries’ real profits were higher than were being
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