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A Critique of Capital Budgeting Questionnaires

Author

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  • Allen Rappaport

    (College of Business Administration, Wichita State University, Wichita, KS 67208)

Abstract

Rosenblatt and Jucker, in a paper published in this Journal [Rosenblatt, M. J., J. V. Jucker. 1979. Capital expenditure decision-making: Some tools and trends. Interfaces 9 (2).], report an “encouraging” and “unmistakable” trend of increased adoption of discounting techniques that is regarded as “significant” and “in the right direction.” The basis for their conclusion is a review of 13 studies and surveys published from 1966 through 1975. Unfortunately, a number of the studies mentioned have serious design deficiencies which result in overstating the proportion of firms using discounting techniques and the relative importance in the capital budgeting process.To illustrate the kinds of problems that abound throughout published capital budgeting surveys, four of the surveys cited by Rosenblatt and Jucker were examined. Five surveys, not cited by Rosenblatt and Jucker, were examined with generally the same consistent pattern of deficiencies as those jointly on their list of citations and covered in this note.

Suggested Citation

  • Allen Rappaport, 1979. "A Critique of Capital Budgeting Questionnaires," Interfaces, INFORMS, vol. 9(3), pages 100-102, May.
    • Handle: RePEc:inm:orinte:v:9:y:1979:i:3:p:100-102
    DOI: 10.1287/inte.9.3.100
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    Cited by:

    1. Brien, Mairead O, 1997. "Payback: A gulf between managerial accounting and financial theory in practice -- A view from accountants and finance officers in Ireland," The International Journal of Accounting, Elsevier, vol. 32(2), pages 173-186.
    2. Mark Freeman & Garry Hobbes, 1991. "Costly Information, Informed Investors and the Use of Sophisticated Capital Budgeting Techniques," Working Paper Series 1, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    3. Siziba, Simiso & Hall, John Henry, 2021. "The evolution of the application of capital budgeting techniques in enterprises," Global Finance Journal, Elsevier, vol. 47(C).
    4. Petr Marek, 2007. "Notes about Study on History of Theoretical Approaches to Investment Decision [Poznámky ke studiu historie teoretických přístupů k investičnímu rozhodování]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2007(4), pages 23-29.
    5. W. Jan Brzeski & Austin J. Jaffe & Stellan Lundstrom, 1993. "Institutional Real Estate Investment Practices: Swedish and United States Experiences," Journal of Real Estate Research, American Real Estate Society, vol. 8(3), pages 293-324.
    6. Segelod, Esbjorn, 1998. "A note on the survey of project evaluation techniques in major corporations," International Journal of Production Economics, Elsevier, vol. 54(2), pages 207-213, January.

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