A Survey of Multinational Capital Budgeting

Stanley, Marjorie T.; Block, Stanley B.

doi:10.1111/j.1540-6288.1984.tb01083.x

Cited by 88 publications

(45 citation statements)

References 10 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…CFOs consistently report that major investment decisions are not delegated to lower level management. Headquarters retains decision-making authority over major investments in nearly all firms (97%), which also confirms the role of headquarters as the centralized provider of finance (see also Bower, 1970;Myers, 1984;Stanley and Block, 1984;Harris and Raviv, 1996).…”

Section: Major Investments: Decision-making Authority and Approval Thmentioning

confidence: 62%

“…A number of other papers present survey evidence on capital investment (e.g., Gitman and Forrester, 1977;Stanley and Block, 1984;Ross, 1986;Graham and Harvey, 2001). The work closest to ours is perhaps by Graham, Harvey, and Puri (2015), who examine differences in the delegation of decision-making authority across financial policies (i.e., capital structure, payout, investment or M&A).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The Economics of Capital Allocation in Firms: Evidence from Internal Capital Markets

2017

View full text Add to dashboard Cite

We analyze a unique survey dataset to examine the (micro)foundations of capital allocation in firms. Firms employ systems of interconnected measures to counteract agency problems, including layers of approval, divisional budgets, reporting requirements, and compensation schemes. When making funding decisions, top management relies heavily on top-level, nonfinancial information. However, substantial parts of the capital budget do not require top management approval as firms trade off the benefits and costs of decentralization. Even firms with active internal capital markets tilt capital allocation toward relatively even distributions. Within-firm agency problems may result in divisions' restricted access to internal capital. AbstractWe analyze a unique survey dataset to examine the (micro)foundations of capital allocation in firms. Firms employ systems of interconnected measures to counteract agency problems, including layers of approval, divisional budgets, reporting requirements, and compensation schemes. When making funding decisions, top management relies heavily on top-level, nonfinancial information. However, substantial parts of the capital budget do not require top management approval as firms trade off the benefits and costs of decentralization. Even firms with active internal capital markets tilt capital allocation toward relatively even distributions. Within-firm agency problems may result in divisions' restricted access to internal capital.

show abstract

Section: Major Investments: Decision-making Authority and Approval Thmentioning

confidence: 62%

Section: Introductionmentioning

confidence: 99%

The Economics of Capital Allocation in Firms: Evidence from Internal Capital Markets

2017

View full text Add to dashboard Cite

show abstract

“…Third, we examine what factors determine the use of the methods. For example, does size matter as suggested by Stanley and Block, (1984), Pike (1988Pike ( , 1996, Graham and Harvey (2001), Sandahl and Sjögren (2003), and Brounen et al (2004)? The relation between size and eleven other independent variables and eight capital budgeting methods are analysed.…”

Section: Introductionmentioning

confidence: 99%

What Determines the Use of Capital Budgeting Methods? Evidence from Swedish Listed Companies

Daunfeldt¹,

Hartwig

2014

JFE

View full text Add to dashboard Cite

Purpose: This paper aims to extend and contribute to prior research on the association between company characteristics and choice of capital budgeting methods (CBMs). Design/methodology/approach: A multivariate regression analysis on questionnaire data from 2005 and 2008 is used to study which factors determine the choice of CBMs in Swedish listed companies. Findings: Our results supported hypotheses that Swedish listed companies have become more sophisticated over the years (or at least less unsophisticated) which indicates a closing of the theory-practice gap; that companies with greater leverage used payback more often; and that companies with stricter debt targets and less management ownership employed accounting rate of return more frequent. Moreover, larger companies used CBMs more often. Originality/value: The paper contributes to prior research within this field by being the first Swedish study to examine the association between use of CBMs and as many as twelve independent variables, including changes over time, by using multivariate regression analysis. The results are compared to a US and a continental European study.

show abstract

“…Gitman & Forrester performed a survey of large US firms and found out that only less that 10 percent of respondents use net present value as their primary method and more than a half of firms report IRR as primary method (Gitman, Forrester 1977). Stanley & Block have also found out that 65 percent of respondents have chosen IRR as their primary technique for project evaluation (Stanley, Block 1984). The results of research conducted by Moore & Reichert revealed that 86 percent of US Fortune 500 firms as primary method use some type of discounted cash flow analysis (Moore, Reichert 1983).…”

Section: Studies On Behavioural Corporate Financementioning

confidence: 99%

Corporate Behavioural Finance – The Case of Lithuania

Jurevičienė

Bikas

Keliuotytė-Staniulėnienė

et al. 2013

Business, Management and Education

View full text Add to dashboard Cite

Abstract. Behavioural finances became especially important in recent years. Majority of studies covers individual investor decision making factors while corporate customers' investment behaviour, as a rule, encompass liability side (capital expenses, financing and structure; dividend policy; assessment of potential investment projects, etc.). This paper aims to establish investment possibilities of nonfinancial corporate investors in financial markets, basing on accomplished survey of companies managers, and strives to determine enterprise investment in financial assets assumptions. Though the results of the survey sample not fully meets the requirements of representativeness but satisfy the minimum margin error -up to 10 percent -acceptable level.

show abstract

A Survey of Multinational Capital Budgeting

Cited by 88 publications

References 10 publications

The Economics of Capital Allocation in Firms: Evidence from Internal Capital Markets

The Economics of Capital Allocation in Firms: Evidence from Internal Capital Markets

What Determines the Use of Capital Budgeting Methods? Evidence from Swedish Listed Companies

Corporate Behavioural Finance – The Case of Lithuania

Contact Info

Product

Resources

About