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The Capital Asset Pricing Model: An Evaluation of its Potential as a Strategic Planning Tool

Author

Listed:
  • Thomas H. Naylor

    (Duke University)

  • Francis Tapon

    (University of Guelph, Guelph, Ontario, Canada)

Abstract

In this paper we provide a summary of the capital asset pricing model (CAPM) and point out how it might possibly be used as a tool for strategic planning by corporations that own a portfolio of businesses. We also point out some of the assumptions underlying the CAPM which must be satisfied if it is to be used for strategic planning. Next we include a critical appraisal of the CAPM as a strategic planning tool. Finally, we state the case for linking competitive strategy models, CAPM models, and business simulation models.

Suggested Citation

  • Thomas H. Naylor & Francis Tapon, 1982. "The Capital Asset Pricing Model: An Evaluation of its Potential as a Strategic Planning Tool," Management Science, INFORMS, vol. 28(10), pages 1166-1173, October.
    • Handle: RePEc:inm:ormnsc:v:28:y:1982:i:10:p:1166-1173
    DOI: 10.1287/mnsc.28.10.1166
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    Cited by:

    1. Cano Rodríguez, Manuel, 2002. "Is the risk-return paradox still alive?," DEE - Working Papers. Business Economics. WB wb024818, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    2. Friberg, Richard, 2019. "All the bottles in one basket? Diversification and product portfolio composition," CEPR Discussion Papers 14119, C.E.P.R. Discussion Papers.
    3. Cano Rodríguez, Manuel, 2002. "Comportamiento heterocedástico entre rentabilidad y riesgo," DEE - Documentos de Trabajo. Economía de la Empresa. DB db021710, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    4. Wright, Peter & Kroll, Mark & Pray, Bevalee & Lado, Augustine, 1995. "Strategic orientations, competitive advantage, and business performance," Journal of Business Research, Elsevier, vol. 33(2), pages 143-151, June.

    More about this item

    Keywords

    corporate planning;

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