Now we have entered the era of globalized markets, the potential for regulators, investors and companies to clash over national classification is huge. Take the case of the merging automobile firms Daimler and Chrysler versus the Standard&Poor's 500 index, which tracks the stock prices of the biggest US corporates.
A stalwart of the S&P500 for years, Chrysler regards itself as American as apple pie. Many US institutional investors agree and have formed a great attachment to the motor giant. But S&P has announced that its proposed merger with German motor company Daimler-Benz, expected to be completed mid-November, will make Chrysler (shock horror) European and not eligible for inclusion in the S&P500.
Investment funds linked to this index will therefore have to sell their Chrysler stock, worth around $2 billion. The stock prices of both car companies plummeted after S&P's ruling at the start of October, and there has since been much protest at the decision. The new DaimlerChrysler had been upgraded in the major European indexes including the German DAX and the Dow Jones Euro Stoxx, and expected a similar move by the S&P. It has been estimated that the company would have had a 1% S&P weighting (compared with Chrysler's 0.4%