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A Survey of Capital Budgeting Practices in Corporate India

Author

Listed:
  • Satish Verma
  • Sanjeev Gupta
  • Roopali Batra

Abstract

The present study aims to unveil the status of capital budgeting in India particularly after the advent of full-fledged globalisation and in the era of cutthroat competition, where companies are being exposed to various degrees of risk. For the above objective a comprehensive primary survey was conducted of 30 CFOs/CEOs of manufacturing companies in India, so as to find out which capital budgeting techniques is more preferred, discounted or non-discounted. The study also aims at examining the capital budgeting methods used for incorporating risk in investment proposals. It further endeavours to evaluate the impact of different factors or variables on the selection of a particular capital budgeting technique. For example, it was investigated that whether there exists any relationship between a size of company's capital budget and the method of capital budgeting adopted by it. Similarly it was discovered that is there any systematic relationship between different company related factors like age of a company, CEO education/qualification and the capital budgeting method adopted by it.

Suggested Citation

  • Satish Verma & Sanjeev Gupta & Roopali Batra, 2009. "A Survey of Capital Budgeting Practices in Corporate India," Vision, , vol. 13(3), pages 1-17, July.
    • Handle: RePEc:sae:vision:v:13:y:2009:i:3:p:1-17
    DOI: 10.1177/097226290901300301
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    References listed on IDEAS

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    1. Trahan, Emery A. & Gitman, Lawrence J., 1995. "Bridging the theory-practice gap in corporate finance: A survey of chief financial officers," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(1), pages 73-87.
    2. Stanley, Marjorie T & Block, Stanley B, 1984. "A Survey of Multinational Capital Budgeting," The Financial Review, Eastern Finance Association, vol. 19(1), pages 36-54, March.
    3. Schall, Lawrence D & Sundem, Gary L & Geijsbeek, William R, Jr, 1978. "Survey and Analysis of Capital Budgeting Methods," Journal of Finance, American Finance Association, vol. 33(1), pages 281-287, March.
    4. John Graham & Campbell Harvey, 2002. "HOW DO CFOs MAKE CAPITAL BUDGETING AND CAPITAL STRUCTURE DECISIONS?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 15(1), pages 8-23, March.
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    Cited by:

    1. Ka Chi Lam & Olalekan Shamsideen Oshodi, 2015. "The capital budgeting evaluation practices (2014) of contractors in the Hong Kong construction industry," Construction Management and Economics, Taylor & Francis Journals, vol. 33(7), pages 587-600, July.

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