An exploratory study into the adoption of capital budgeting techniques by agricultural co‐operatives

Abstract

Finds that agricultural co-operatives have not been as sophisticated in their utilization of capital budgeting as a planning and financial management tool as have traditional corporations. Suggests that this may be due to the differences in the organizational objectives of the co-operatives and the forprofit corporations.

Capital budgeting practices by large Brazilian companies

“…With regard to practices for investment analysis found in the studies, the Payback Period is noticed as the most used (Block, 2003;Brijlal & Quesada, 2009;Brounen et al, 2004;Holmén & Pramborg, 2009;Kwong, 1986;Lam et al, 2007;Lazaridis, 2004;Peel & Bridge, 1998Pike, 1982Pike, , 1985Pike, , 1988Sandahl & Sjogren, 2003;Schall, Sundem & Geijsbeek, 1978;White, Miles & Munilla, 1997).…”

A Survey of Capital Budgeting Techniques in the Public and Private Sectors of a Less Developed Country (LDC)

“…This argument is supported by the findings of some studies, such as Kamath and Elmer (1989) and Kamath and Oberst (1992), that smaller percentage of hospitals, as not-for-profit units, account for risk in their capital budgeting decisions than their profitmaking counterparts. And as stated before, White et al (1997) attribute the lack of formal treatment of risk in not-for-profit organizations to the difficulties encountered in explicit incorporation of risk in the capital investment evaluation. Thus, hypothesis six can be stated as follows:…”

“…As mentioned earlier, recent research has shown that there is an increased awareness of the discounted cash flow techniques in private and governmental or nonprofit organization (Pike, 1988;White et al, 1997;Bailes et al, 1998;and Sekwat, 1999). Specifically, Sekwat (1999) shows that capital budgeting is regarded as efficiency improving tool in local governments (municipalities) in part of the U.S.…”

“…These results are similar to an earlier survey by Kamath and Elmer (1989) where PB was found to be the most widely used method by hospitals, followed by NPV method. White et al (1997) studied the adoption of capital budgeting techniques by agricultural cooperatives in the U.S. The results showed that PB, ARR, IRR, NPV, and PI are used by 79.1 percent, 67.4 percent, 58.2 percent, 51.1 percent, and 55.8 percent of the respondents respectively.…”

“…Further, Raj (1977) states that public enterprises in the LDCs have other purposes to serve via their capital investments such as savings in foreign exchange, development of an industry in a backward area or introducing a new technology. White et al (1997) argue that not-for-profit organizations typically lagged behind profit-oriented companies in adopting management technologies. Further, they quoted Birkofer et al (1987) for three factors that may preclude adoption of capital budgeting techniques by the not-for-profit units.…”