IDEAS home Printed from https://ideas.repec.org/a/mic/tmpjrn/v8y2012i02p81-87.html
   My bibliography  Save this article

A Comprehensive Review of Scientific Literature on Methods for Determining Discount Rates in Corporate Practices

Author

Listed:
  • Klára Szűcs Markovics

    (University of Miskolc)

Abstract

On the basis of the findings of research conducted in eighteen countries and in the Central and Eastern European region, this study seeks to understand how the discount rate is set when capital budgeting practices are involved. According to the reviewed academic literature, the weighted average cost of capital is the most popular method of determining discount rates in a number of countries. Besides this, decision makers often apply the single method of corporate required rate of return regardless of the character of specific decision aspects and market risks.

Suggested Citation

  • Klára Szűcs Markovics, 2012. "A Comprehensive Review of Scientific Literature on Methods for Determining Discount Rates in Corporate Practices," Theory Methodology Practice (TMP), Faculty of Economics, University of Miskolc, vol. 8(02), pages 81-87.
    • Handle: RePEc:mic:tmpjrn:v:8:y:2012:i:02:p:81-87
    as

    Download full text from publisher

    File URL: http://tmp.gtk.uni-miskolc.hu/volumes/2012/02/TMP_2012_02_12_Szucs_Markovics.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Graham, John R. & Harvey, Campbell R., 2001. "The theory and practice of corporate finance: evidence from the field," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 187-243, May.
    2. Brounen, D. & de Jong, A. & Koedijk, C.G., 2004. "Corporate Finance In Europe Confronting Theory With Practice," ERIM Report Series Research in Management ERS-2004-002-F&A, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guedes, José & Santos, Pedro, 2016. "Valuing an offshore oil exploration and production project through real options analysis," Energy Economics, Elsevier, vol. 60(C), pages 377-386.
    2. Osborne, Michael J., 2010. "A resolution to the NPV-IRR debate?," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(2), pages 234-239, May.
    3. Anastassiadis, Friederike & Liebe, Ulf & Musshoff, Oliver, 2012. "Finanzielle Flexibilität In Landwirtschaftlichen Investitionsentscheidungen: Ein Discrete Choice Experiment," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137142, German Association of Agricultural Economists (GEWISOLA).
    4. Hermes, Niels & Smid, Peter & Yao, Lu, 2007. "Capital budgeting practices: A comparative study of the Netherlands and China," International Business Review, Elsevier, vol. 16(5), pages 630-654, October.
    5. Carlo Alberto Magni & Ken V. Peasnell, 2015. "The Term Structure of Capital Values:An accounting-based framework for measuring economic profitability," Department of Economics 0060, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    6. Peter Markovič & Michal Šinský, 2009. "Trends in application of capital budgeting methods for investment projects evaluation," Ekonomika a Management, Prague University of Economics and Business, vol. 2009(1).
    7. Grubisic Seba, Mihaela & Orsag, Silvije, 2015. "Corporate Motives For Public Shares Offering During The Financial Crisis," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 6(1), pages 99-114.
    8. Satish Kumar & Riya Sureka & Sisira Colombage, 2020. "Capital structure of SMEs: a systematic literature review and bibliometric analysis," Management Review Quarterly, Springer, vol. 70(4), pages 535-565, November.
    9. G. Oka Warmana & I. Ketut Rahyuda & Ida Bagus Anom Purbawangsa & Ni Luh Gede Sri Artini, 2020. "Investigating Capital Structure Speed of Adjustment (SOA) of Indonesian Companies for Corporate Value," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 21(3), pages 215-231, September.
    10. Gebauer, Stefan & Setzer, Ralph & Westphal, Andreas, 2017. "Corporate debt and investment: a firm analysis for stressed euro area countries," Working Paper Series 2101, European Central Bank.
    11. Chittenden, Francis & Derregia, Mohsen, 2015. "Uncertainty, irreversibility and the use of ‘rules of thumb’ in capital budgeting," The British Accounting Review, Elsevier, vol. 47(3), pages 225-236.
    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).
    13. Magni, Carlo Alberto, 2013. "Generalized Makeham’s formula and economic profitability," Insurance: Mathematics and Economics, Elsevier, vol. 53(3), pages 747-756.
    14. Vivien Beattie & Alan Goodacre & Sarah Jane Thomson, 2006. "Corporate Financing Decisions: UK Survey Evidence," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(9‐10), pages 1402-1434, November.
    15. Iqbal Hussain, Hafezali & Mohd Farid, Shamsudin & Noor H, Jabarullah & Milad Abdelnabi, Salem & Fekri Ali, Shawtari, 2016. "Speed of Adjustment and Financial Constraints: Evidence from the UK," MPRA Paper 79265, University Library of Munich, Germany.
    16. Andor, Gyorgy & Mohanty, Sunil K. & Toth, Tamas, 2015. "Capital budgeting practices: A survey of Central and Eastern European firms," Emerging Markets Review, Elsevier, vol. 23(C), pages 148-172.
    17. Ayub, Usman & Qaddus, Uzma & Zakaria, Muhammad & Shafique, Attayah & Ahmed, Junaid, 2018. "Thou should not panic! Let calmness fight the Crocodile Bite," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 509(C), pages 302-315.
    18. Kent Baker & Shantanu Dutta & Samir Saadi, 2011. "Corporate Finance Practices in Canada: Where Do We Stand?," Multinational Finance Journal, Multinational Finance Journal, vol. 15(3-4), pages 157-192, September.
    19. Gregory, Alan & Hua, Shan & Tharyan, Rajesh, 2018. "In search of beta," The British Accounting Review, Elsevier, vol. 50(4), pages 425-441.
    20. Matthias Nnadi & Vachiraporn Surichamorn & Ranadeva Jayasekera & Yacine Belghitar, 2022. "Empirical analysis of debt maturity, cash holdings and firm investment in developing economies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 3345-3372, July.

    More about this item

    Keywords

    capital budgeting; discount rates; required rate of return; weighted average cost of capita;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mic:tmpjrn:v:8:y:2012:i:02:p:81-87. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/vgtmihu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.