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The financial analysis of foreign investment decisions by large UK-based companies

Author

Listed:
  • Adrian Buckley
  • Peter Buckley
  • Pascal Langevin
  • Ka Lun Tse

Abstract

Various studies of international investment appraisal practices of US-based multinationals suggest that they largely fall to conform to theoretical ideas on project screening and fall short of those used for domestic projects. The findings of these American investigations are summarized. The survey that is the focus of this paper relates to international investment project appraisal practices of large UK companies. It is a unique study in the sense that it is the first British investigation of international capital appraisal procedures which applies statistical analysis to its results. Broadly, the findings are not dissimilar to those relating to US multinationals' practices. Particularly interesting is the finding that 22% of respondents use payback and/or accounting rate of return as their sole primary decision criterion. This reinforces the continuing need for a better conceptual framework for international investment appraisal.

Suggested Citation

  • Adrian Buckley & Peter Buckley & Pascal Langevin & Ka Lun Tse, 1996. "The financial analysis of foreign investment decisions by large UK-based companies," The European Journal of Finance, Taylor & Francis Journals, vol. 2(2), pages 181-206.
    • Handle: RePEc:taf:eurjfi:v:2:y:1996:i:2:p:181-206
    DOI: 10.1080/13518479600000004
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    References listed on IDEAS

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    1. A. Buckley, 1995. "The classical tax system, imputation tax and capital budgeting," The European Journal of Finance, Taylor & Francis Journals, vol. 1(2), pages 113-128.
    2. Marie E Wicks Kelly & George C Philippatos, 1982. "Comparative Analysis of the Foreign Investment Evaluation Practices by U.S.-Based Manufacturing Multinational Companies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 13(3), pages 19-42, September.
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    Cited by:

    1. 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).
    2. Riya Sureka & Satish Kumar & Deepraj Mukherjee & Christina Theodoraki, 2023. "What restricts SMEs from adopting sophisticated capital budgeting practices?," Small Business Economics, Springer, vol. 60(1), pages 265-290, January.
    3. Buckley, Adrian & Eijgenhuijsen, Hans, 1997. "A conceptual framework for evaluating foreign investments," Serie Research Memoranda 0008, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.

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