Capital budgeting in Europe: confronting theory with practice

Rossi, Matteo

doi:10.1504/ijmfa.2014.066403

Cited by 32 publications

(42 citation statements)

References 17 publications

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“…This outcome is also supported by other studies (Andrés, Fuente, & San-Martin, 2015;Benetti, Decourt, & Terra, 2007;Yepes & Cuartas, 2014). Although such studies provide valuable insights into the engagement of sophisticated CBS within the business world of investments, it appears that few firms in developed countries have been observed to use sophisticated CBS practices such as RMT (Alkaraan & Northcott, 2013;Rossi, 2014). The work of Andor, Mohanty, and Toth (2015) have documented significant variations in the use of CBS practices across countries of similar levels of economic development.…”

Section: Introductionsupporting

confidence: 74%

“…First, CBS practices may vary across countries because of environmental uncertainty. This is evidenced by the reports shown in several studies (Andrés et al, 2015;Andor et al, 2015;Hermes et al, 2007;Rossi, 2014;Yepes & Cuartas, 2014) which seemed to have overlooked the environmental uncertainty factor. The reason could be because such studies may not recognise that environmental uncertainty can impact cross-country variations in CBS practices, with a few exceptions (Brunzell, Liljeblom, & Vaihekoski, 2013;Liu, Meng, & Fellows, 2015).…”

Section: Introductionmentioning

confidence: 98%

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National Differences in Capital Budgeting Systems: A Comparison between Indonesian and Australian Firms

Graham¹,

Sathye²

2018

AJBA

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Manuscript type: Research paper. Research aims: This study examines the impact of cross-cultural differences on capital budgeting systems. Design/ Methodology/ Approach: Drawing on the contingency theory, 67 non-financial firms listed in Indonesia and Australia were analysed on a comprehensive range of capital budgeting systems. Research findings: The findings support our predictions that relative to Australian firms, the Indonesian firms were found to emphasise more on sophisticated capital budgeting systems (e.g. real options). The results seem to be driven by Indonesia's higher level of perceived environmental uncertainty coupled with Sharia governance rules that aim to mitigate risky transactions. This study also provides evidence to show that the emphasis on sophisticated capital budgeting systems was driven by firm size and finance managers' level of education attainment. Theoretical contributions/ Originality: Prior research has documented an incomplete picture of the link between national culture and capital budgeting systems. This is attributed to the lack of the development of contextual foundations for looking at cross-cultural differences followed by the narrow range of capital budgeting systems being considered in research. Practitioner/ Policy implications: The findings of this study reflect the capital budgeting practices of Indonesia and Australia. The

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Section: Introductionsupporting

confidence: 74%

Section: Introductionmentioning

confidence: 98%

National Differences in Capital Budgeting Systems: A Comparison between Indonesian and Australian Firms

Graham¹,

Sathye²

2018

AJBA

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“…The research for an excellent combination between investment and financing has stimulated great attention on the literature, which is focused on a range of variables that influence the degree of company's indebtedness, in both financial and economic natures (Baginski and Hassel, 2004;Bernstein and Wild, 1998;Fiori, 2003;Foster, 1986;Giroux, 2003;Giunta, 2007;Helfert, 1997;Higgins, 2007;Ingram, Albright and Baldwin, 2002;Mazzoleni, 2012;Meigs et al, 2001;Rossi, 2014aRossi, , 2014bValue, 2001;Van Horne, 1972;Weston and Brigham, 1978). In particular, the observation of the relationship between the structure of the investments and financing should be analysed, thanks to a series of indicators, based on the analysis of financial statements (Ferrero et al, 2006;Baginski and Hassel, 2004;Ferrero et al, 2003;Foster, 1986;Giroux, 2003;Helfert, 1997;Higgins, 2007;Ingram, Albright, and Baldwin, 2002;Meigs et al, 2001;Value, 2001).…”

Section: Literaturementioning

confidence: 99%

A decision model for the suitable financing for small and medium enterprises

Giacosa

Mazzoleni

2016

IJMFA

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This research proposes a "model of selection of the financing sources" which allows to identify both the financing entity to which the company may resort and the appropriate financing methods for the company (with particular reference to alternative instruments to the banking ones). Based on a sample of small and medium-sized Italian companies, and thanks to a quantitative method, the proposed model permits to select the financial sources, in order to choose the most appropriate financing methods for small and medium companies. It allows to suggest to the owners/or to the management appropriate debt-covering instruments different from the banking ones. The application of the model enables to change the financial culture within the company by expanding the knowledge and the use of alternative financing instruments to the bank and working on management unpreparedness and capital inadequacy of the companies. The originality of the research is coherent in the current context of the reference, which is changing in a profound way for both economic and normative reasons as well as presenting a different perspective in the light of the companies' experience of the past years.Reference to this paper should be made as follows: Giacosa, E. and Mazzoleni, A. (2016) 'A decision model for the suitable financing for small and medium enterprises', Int.

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“…When considering funding, the choice between the use of equity or the external borrowings is so relevant, as it impacts on the financial and economic sphere (Baginski and Hassel, 2004;Bernstein and Wild, 1998;Brealey et al, 1999;Capasso et al, 2015;Giacosa and Mazzoleni, forthcoming;La Rocca, 2007;Miglietta, 2004;Rossi, 2014a and2014b;Rossi et al, 2015;Singer, 2000).…”

Section: Literaturementioning

confidence: 99%

The financing methods for small and medium companies: comparison between Italy and Germany

Rossi¹,

Giacosa²,

Mazzoleni³

2016

COC

Self Cite

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PurposeThe aim of the research is to identify the appropriate financing methods for small and medium-sized enterprises (with particular reference to alternative instruments to the banking ones), by comparing Italian and German companies. MethodologyBased on a sample of Italian and German small-medium sized enterprises and thanks to a quantitative method, the research methodology was developed by the following logical steps: i) illustration of the informative matrix used, thanks to which it's possible to identify different types of financing instruments (also those alternative to the banking ones) the most suitable for the analyzed companies; ii) adoption of the informative matrix to the sample of Italian and German companies; iii) comparison Italy-Germany. FindingsSeveral differences emerged between Italian and German small and medium-sized companies, regarding the most suitable suggested financing forms. The degree of effectiveness of the financing instruments alternative to the debt appears influenced by the analysed space-time context. With reference to Italy, the effectiveness of these instruments is rather modest. With reference to Germany, it occurs the opposite scenario. OriginalityThe originality of the paper is linked to the current profound changes in both economic and normative terms. The research tries to lead companies to change their financial culture, also considering financial instruments alternative to the bank debt particularly suitable for small and medium-sized enterprises.

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Capital budgeting in Europe: confronting theory with practice

Cited by 32 publications

References 17 publications

National Differences in Capital Budgeting Systems: A Comparison between Indonesian and Australian Firms

National Differences in Capital Budgeting Systems: A Comparison between Indonesian and Australian Firms

A decision model for the suitable financing for small and medium enterprises

The financing methods for small and medium companies: comparison between Italy and Germany

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