Capital Budgeting

Dayananda, Don; Irons, Richard; Harrison, Steve; Herbohn, John; Rowland, Patrick

doi:10.1017/cbo9780511753701

Cited by 70 publications

(20 citation statements)

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“…Capital budgeting investment of firms involved large sums of money over the long periods are crucial for the sustaining, surviving and flourishing in markets (Emmanuel, Harris and Komakech, 2010;Ghahremani, Aghaie and Abedzadeh, 2012), decisions on capital budgeting investments are critical owing to the influence of uncertainty factors (e.g., Peterson andFabozzi, 2002, Cooper et al, 2002;Dayananda et al, 2002;Ghahremani, Aghaie and Abedzadeh, 2012). The global financial crisis epitomised this truth.…”

Section: Theoretical View On Ccorporate Finance Theory and Corporate mentioning

confidence: 99%

Moderating Effect of Social Uncertainty between Capital Budgeting Practices and Performance

Kengatharan

2017

ijafr

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Capital budgeting is crucial in order for companies to sustain themselves, survive and flourish in markets and to increase shareholders" wealth. The performance of a firm depends on its effective investment decisions. Investing in the 'right' project has an influence on the success of the firm and its future growth. Even though risk and uncertainty factors carefully considered in investment decision making. Therefore, aim of this study was to evaluate the moderating effect of uncertainty between capital budgeting practices and performance based on Sri Lankan emerging market. The data were garnered from primary data and secondary data sources. The primary data were collected from 186 CFOs working in companies in Sri Lanka using self-administered questionnaires. The questionnaire was piloted with a sample of five CFOs. The secondary data were mainly collected from CSE via the Bloomberg website/annual reports for the 5 years period. In order to evaluate the moderating effect of uncertainty between capital budgeting practices and performance, social uncertainty has been considered in this study. Performance was measured by Tobin_q. Data were analysed using descriptive, inferential and multivariate analysis. Findings of the study revealed that an increased level of social uncertainty weakens the positive relationship between sophisticated capital budgeting practices and Tobin_q. In a similar way, an increased level of social uncertainty weakens the positive relationship between advanced capital budgeting practices and Tobin_q and vice versa. Overall, this study has made contribution as identified the moderating effect of uncertainty between the relationship of capital budgeting practices and performances. In a nutshell, beyond its valuable contribution, this study serves as a springboard for future research in many ways.

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Section: Theoretical View On Ccorporate Finance Theory and Corporate mentioning

confidence: 99%

Moderating Effect of Social Uncertainty between Capital Budgeting Practices and Performance

Kengatharan

2017

ijafr

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“…As aforementioned, the capital budgeting practices are the investment decision taken for increasing shareholders value (Dayananda et al, 2002).…”

Section: Capital Budgeting Theory and Practices In Developed Countriesmentioning

confidence: 99%

Capital Budgeting Theory and Practice: A Review and Agenda for Future Research

Kengatharan¹

2016

AEF

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Purpose -The main purpose of this research was to delineate unearth lacunae in the extant capital budgeting theory and practice during the last two decades and ipso facto become springboard for future scholarships. Design/methodology/approach -Web of science search and iCat search were used to locate research papers published during the last twenty years. Four criteria have been applied in selection of research papers: be an empirical study, published in English language, appeared in peer reviewed journal and full text research papers. These papers were collected from multiple databases including OneFile (GALE), SciVerse ScienceDirect (Elsevier), Informa -Taylor & Francis (CrossRef), Wiley (CrossRef), Business (JSTOR), Arts & Sciences (JSTOR), Proquest ,MEDLINE (NLM), and Wiley Online Library. Search parameters covered capital budgeting, capital budgeting decision, capital budgeting theory, capital budgeting practices, capital budgeting methods, capital budgeting models, capital budgeting tools, capital budgeting techniques, capital budgeting process and investment decision. Thematic text analyses have been explored to analyses them. Findings -Recent studies lent credence on the use of more sophisticated capital budgeting methods along with many capital budgeting tools for incorporating risk. Notwithstanding, it drew a distinction between developed and developing countries. Moreover, factors impinging on choice of capital budgeting practice were identified, and bereft of behavioural finance and event study methodological approach were highlighted. More extensive studies are imperative to build robust knowledge of capital budgeting theory and practice in the chaotic environment. Policy recommendation -This research was well thought out in its design and contributed by stating the known and unknown arena of capital budgeting during the last two decades. This scholarship facilitates to academics, practitioners, policy makers, and stakeholders of the company Limitations -Limitations of this study were primarily concerned with Tower of Babel Bias and time constraint. Keywords: Capital budgeting theory and practices, capital budgeting tools for incorporating risk, discount rate Paper type: Literature review Introduction Predominantly, area of capital and capital budgeting of financial management have been attracted many researchers during the last five decades and the seminal studies culminated with presenting many theories (e.g.,

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“…He further States that a capital budget typically has a long term horizon a minimum of five years because the expenditures are for investments in assets that are expected to benefit for more than one year. Dayananda et al, (2002) stated that capital budgeting is primarily concerned with sizable investments in long term assets. These assets may be tangible items such as property, plant and equipment or intangible ones such as new technology, patent or trademarks.…”

Section: Assumptionsmentioning

confidence: 99%

“…This process of evaluating, comparing and selecting the needed project given the limited resources is called Capital Budgeting. In support of this Dayananda et al, (2002) defines Capital budgeting to be the process of determining which investment projects result maximizes the shareholders value.…”

Section: Introductionmentioning

confidence: 99%