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The Capital Budgeting Process: Theory and Practice

Author

Listed:
  • Tarun K. Mukherjee

    (Department of Economics and Finance, University of New Orleans, New Orleans, Louisiana 70148)

  • Glenn V. Henderson

    (Department of Finance, Insurance, Real Estate, and Law, University of Cincinnati, Cincinnati, Ohio 45221)

Abstract

Survey evidence in a four-stage framework for the capital budgeting process reveals that many capital budgeting practices differ from what the relevant theory prescribes. Much of the gap, however, can be explained by deficiencies in the theory itself, suggesting new directions for ongoing capital budgeting research.

Suggested Citation

  • Tarun K. Mukherjee & Glenn V. Henderson, 1987. "The Capital Budgeting Process: Theory and Practice," Interfaces, INFORMS, vol. 17(2), pages 78-90, April.
    • Handle: RePEc:inm:orinte:v:17:y:1987:i:2:p:78-90
    DOI: 10.1287/inte.17.2.78
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    Citations

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    Cited by:

    1. Mike Dempsey, 2014. "The Modigliani and Miller Propositions: The History of a Failed Foundation for Corporate Finance?," Abacus, Accounting Foundation, University of Sydney, vol. 50(3), pages 279-295, September.
    2. Michael Dempsey, 2015. "Stock Markets, Investments and Corporate Behavior:A Conceptual Framework of Understanding," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number p1007, December.
    3. Eric Kemp-Benedict, 2024. "Cost share-induced technological change: An analytical classical-evolutionary model," Journal of Evolutionary Economics, Springer, vol. 34(3), pages 515-567, July.
    4. Collan, Mikael, 2004. "Giga-Investments: Modelling the Valuation of Very Large Industrial Real Investments," MPRA Paper 4328, University Library of Munich, Germany.
    5. Rose Jestina Katabi, Romanus Dimoso, 2018. "Relationship Between SMEs Sources of Funds and Investment Evaluation Techniques," Business and Management Studies, Redfame publishing, vol. 4(4), pages 61-70, December.
    6. Segelod, Esbjörn, 1995. "The capital budgeting manual," Working Papers 1995:4, Uppsala University, Department of Business Studies.
    7. Lefley, Frank, 1997. "Approaches to risk and uncertainty in the appraisal of new technology capital projects," International Journal of Production Economics, Elsevier, vol. 53(1), pages 21-33, November.
    8. Segelod, Esbjörn, 1995. "Resource allocation in divisionalized groups : a survey of major Swedish groups," Working Papers 1995:3, Uppsala University, Department of Business Studies.
    9. Slagmulder, Regine & Bruggeman, Werner & van Wassenhove, Luk, 1995. "An empirical study of capital budgeting practices for strategic investments in CIM technologies," International Journal of Production Economics, Elsevier, vol. 40(2-3), pages 121-152, August.
    10. Joanna Ho & L. Keller & Pamela Keltyka, 2005. "How Do Information Ambiguity and Timing of Contextual Information Affect Managers’ Goal Congruence in Making Investment Decisions in Good Times vs. Bad Times?," Journal of Risk and Uncertainty, Springer, vol. 31(2), pages 163-186, September.
    11. Nicole Bastian Johnson & Thomas Pfeiffer & Georg Schneider, 2017. "Two-stage capital budgeting, capital charge rates, and resource constraints," Review of Accounting Studies, Springer, vol. 22(2), pages 933-963, June.
    12. Sureka, Riya & Kumar, Satish & Colombage, Sisira & Abedin, Mohammad Zoynul, 2022. "Five decades of research on capital budgeting – A systematic review and future research agenda," Research in International Business and Finance, Elsevier, vol. 60(C).

    More about this item

    Keywords

    finance: capital budgets;

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