Capital structure design of foreign subsidiaries in multinational corporate groups with a German parent company

This essay gives an overview of the special features of funding foreign subsidiaries. The central issue discussed is the possibility of funding by equity capital or borrowed capital in the form of loans and trade accounds payable. Various environmental settings are introduced which lead to different decisions regarding the capital structure. The observations relate to a subsidiary company that is to be set up anew, where the possibility of design in the capital structure is given and therefore existing financing structures are not considered.