This website uses cookies to ensure you have the best experience. Learn more

Royal Dutch And Shell Essay

1246 words - 5 pages

Background. Royal Dutch Shell Group is one of the world’s largest oil corporations and one of the largest companies in Europe. The company was created as a result of a merge between Netherlands’ Royal Dutch and UK’s Shell Corporation. The case looks at the issue of price differentials between several equity listings in different markets from the perspective of investors seeking an arbitrage opportunity. Royal Dutch trades more actively in the Netherlands and U.S. markets, whereas Shell trades more actively in the United States. The result is that the Royal Dutch/Shell relative price moves positively with the Netherlands and U.S. markets and negatively with the U.K. market.

...view middle of the document...

ADRs. An American Depository Receipt is a certificate that can be negotiable and issued by the banks located and operating in the US. This negotiable certificate represents as a number of shares in foreign shares that is issued and traded in the US stock exchange. Companies find it attractive to issue ADRs because it can help the company reduce its administrative costs while saving on duty costs. If a company does not issue an ADR, they must pay a higher duty on each transaction. For each transaction the company would also have to bear the additional cost for administrating that transaction. Investors are interested in ADRs because they raise equity capital and increase the chance to acquire equity at lower costs. This is because ADRs allow the investors to enter into the large market where equity investors are easily available to invest in the company. This would also reduce the legal requirements. Within an ADR, a foreign firm enjoys all the benefits of US listed firms without losing its original identity. The cost of listing in the US stock exchange is high but using the ADR it reduces the cost. Many companies issue ADRs, because it increases the exposures in terms of raising capital in the global market. It also increases the liquidity of a stock of the company and develops the trust in local equity investors to invest into the company. On the other hand, from an investor’s perspective ADRs increases its portfolio into global market where an investor invests into diversified portfolio that ensures the maximum returns of invested capital. It reduces the risks involved in direct investment into foreign market and investors get the benefits in investing ADR’s as the exchange rates of USD is competitive against other currencies that generates higher returns.

Price Differentials. Exhibit 3 presents evidence of a disproportion amongst the ownership of the Royal Dutch and Shell Corp in different markets. The ownership of Royal Dutch is approximately equally split between the U.S. and Dutch investors, while Shell Corp. stock is almost exclusively held in the UK. This could possibly be explained by different tax treatments of the two companies under different rules. For a private investor there would be no difference in the tax treatment between the two investment opportunities. However, pension funds have different tax treatments in each jurisdiction depending on whether the investor bought Royal Dutch or Shell. In Exhibit 8 of the case study, Royal Dutch was trading for $141.368 in Europe and $141.375 in New York (a 7 cent differential). Shell was trading for $124.222 in Europe and $126.554 in New York (a $2.332 differential). These price differences exist due to market inefficiencies; however, these differences are...

Other Essays Like Royal Dutch and Shell

The puppy who lost his way

842 words - 4 pages permits for Shell Oil earlier this year. But Royal Dutch Shell's decision last month to suspend its oil exploration in offshore Alaskan waters — citing disappointing results from a well in the Chukchi Sea — prompted the Interior Department to cancel further oil leases. “In light of Shell’s announcement, the amount of acreage already under lease and current market conditions, it does not make sense to prepare for lease sales in the

Corporate Social Responsibility Essay

5036 words - 21 pages and erratic. The organization needs to take vital assessment in facing those challenges in the business. The biggest challenge for an organization is to satisfy all its stakeholders’ expectation. How This Report Can Help You This report provides the stakeholder identified methodology and corporate social responsibility approaches and initiatives of two multinational companies – Royal Dutch Shell and Tata Steel.     Stakeholder

Finance Recovery

2486 words - 10 pages Comparative Operational & Financial Analysis DISCUSSION TOPICS Peer Group Introduction (RD/Shell, BP, and Chevron Texaco) Overview of Shell Operational Analysis Shell’s Recent Reserve Reclassification Financial Analysis Opportunities and Challenges Ahead SHELL OVERVIEW OVERVIEW OF SHELL STRUCTURE OF ROYAL DUTCH/SHELL OPERATIONAL ANALYSIS FINDING & DEVELOPMENT COSTS – W/O PURCHASES & REVISIONS 12 10 8 6 4 2 0 1998 Shell

Assignment

3210 words - 13 pages i. Abstract: This research report has answered the question: why marketing is a major factor of business success and what step can be taken to further improve the success. This report focuses especially on Royal Dutch Shell and their marketing strategies. To answer the question, the report firstly gives a general definition of marketing, followed by the ways Shell and competitors market their companies. There strategies are based on the four

Ormen Lange Gas Field Overview

5684 words - 23 pages .................................................................................................................................. 7 2.2. United Kingdom ................................................................................................................... 8 Part 3. Ormen Lange and Royal Dutch Shell .................................................................................. 9 Part 4. Ormen Lange: risks and uncertainties ................................................................................ 10 Conclusion

Business Operations in My Organization: Strategies for Achieving Competitive Advantage

3715 words - 15 pages Business Operations In My Organization: Strategies for Achieving Competitive Advantage Lionel Bryan Small Walden University Business Operations in Your Organization: Strategies for Achieving Competitive Advantage Introduction This Praxis paper focuses on four areas that can improve Royal Dutch Shell Group’s (Shell) ability to be more competitive with other integrated oil majors in the global supply chain. Shell’s goal is to be “the

Companies Use Corporate Advertising to Increase Awareness of Corporate Social Responsibility Therefore Increasing Profitability

4098 words - 17 pages , Samy, Bampton, & Halabi (2011) focuses on the Royal Dutch Shell, one of the largest companies in the oil sector. As Shell is a well-known international corporation, the perceptions of this study bases its measurement of corporate social responsibility on content analysis of the annual reports. This research used an empirical case study approach and analyzed data from key performance indicators reported in Royal Dutch Shell Plc’s sustainability

This Is Just A Te St To See If The System Works

1001 words - 5 pages AG) * Fujitsu Siemens Computers (Fujitsu + Siemens AG) * The Balfour Beatty Skanska, construction contractors (Balfour Beatty + Skanska) * Shell-Mex and BP (Royal Dutch Shell + British Petroleum, 1931-1975) * United Launch Alliance (ULA) (Boeing + Lockheed Martin). * Sony BMG Music Entertainment Sony Music Entertainment (part of Sony) + Bertelsmann Music Group (part of Bertelsmann) * MSNBC (Microsoft + NBC Universal

Diversity and Inclusion

676 words - 3 pages Global Diversity and Inclusion at Royal Dutch Shell Royal Dutch Shell (RDS) corporation operates within the global oil and gas industry and is conducts operations in 35 countries. The corporation began restructuring efforts in early 2000s under then CEO, Jeroen van der Veer, which included incorporating a more diversified and inclusive working environment that correlated with its cross country explorations in the oil and gas market. Diversity

Bp Oil Spill

1151 words - 5 pages against BP. The only force that keeps the company in check is its rivals. Royal Dutch Shell, Exxon Mobil, Sinopec, Chevron, etc. are fierce competitors whose resources are the biggest threat to BP. These companies fight for control over huge markets like North America, Europe or potential market like China, and help keep prices in check. 4. Who might be in BP’s strategic group and why? Companies that might be in BP’s strategic group have to

Oil Company

856 words - 4 pages Qatar- 3. Enron (Qatar)- 4. Marubeni (Qatar)- 5. Mitsui (Qatar)- 6. Mobi Oil Qatar- 7. Occidental Petroleum of Qatar Ltd.- 8. Pennzoil Qatar Oil Co- 9. Phillips Petroleum Co. (Qatar)- 10. Royal Dutch Shell (Qatar)- 11. Wintershall (Qatar)- Kuwait 1. Kuwait Oil Company- 2. Kuwait Petroleum Corporation- 3. Kuwait Petroleum International- Oil & Related Companies of India 1. Oil and Natural Gas Corporation- 2. Oil India- 3. Indian Oil

Related Papers

Royal Dutch & Shell Essay

992 words - 4 pages Royal Dutch and Shell Write-up Sebastian Fersch, MiFFT2013 Jimish Gandhi, MiFFT2013 Ryan Kruger, MiFFT2013 Rafa Leon, MiFFT2013 1. What are cross listings and dual listings? Where are RD and Shell listed? What are ADRs? Cross listing is the listing of a company’s common stock on a different exchange than its primary and original stock exchange. For a company to be cross-listed, it must meet the requirements of all the exchanges its

Royal Dutch Shell Essay

660 words - 3 pages i. Summary Royal Dutch Shell is a Dutch and British based company that in 2009 was named the world’s largest corporation by Fortune and world’s second largest corporation by Forbes. Stuck in a quagmire of violence and political issues in Nigeria, Royal Dutch Shell’s challenge was to establish socially responsible business practices to enable the company to sustain and expand its operations in Nigeria and the Niger Delta in particular. A

Global Diversity And Inclusion At Royal Dutch Shell

1188 words - 5 pages Global Diversity and Inclusion at Royal Dutch Shell 1. Should he or the others attempt to respond to negative reactions to the composition of the new Executive Committee? What should they say? To whom? When? How? 2. What goals, if any, should they set for the effect of the restructuring on the composition of Shell’s managerial workforce? 3. How should they review the thousands of managers at the different levels of the organization and

Royal Dutch/Shell Case Write Up Essay

829 words - 4 pages Royal Dutch/Shell case write up Introduction Royal Dutch/Shell Group of Companies was formed through and alliance of Royal Dutch Petroleum company and Shell Transport Trading company in 1907. Even though the two companies remain separate, the matrix structure of Royal Dutch/Shell Group of Companies had helped the company survive the oil price collapse and some other crisis. By 1990, Royal Dutch/Shell’s revenues exceeded the industry leader