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What Determines the Use of Capital Budgeting Methods? Evidence from Swedish listed companies

Author

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  • Daunfeldt, Sven-Olov

    (HUI Research)

  • Hartwig, Fredrik

    (University of Gävle)

Abstract

The choice of capital budgeting methods used by companies listed on the Stockholm Stock Exchange (SSE) is examined using multivariate regression analysis on questionnaire data from 2005 and 2008. Both recommended and non-recommended methods are found to be commonly used, with large companies using capital budgeting methods more frequently than small firms. The choice of capital budgeting methods is also influenced by leverage, growth opportunities, dividend pay-out ratios, the choice of target debt ratio, the degree of management ownership, foreign sales, industry, and individual characteristics of the CEO. The total use of capital budgeting methods is lower in Swedish companies compared to U.S. and continental European companies.

Suggested Citation

  • Daunfeldt, Sven-Olov & Hartwig, Fredrik, 2012. "What Determines the Use of Capital Budgeting Methods? Evidence from Swedish listed companies," HUI Working Papers 57, HUI Research.
    • Handle: RePEc:hhs:huiwps:0057
    as

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    References listed on IDEAS

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    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).

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    More about this item

    Keywords

    Investment decisions; project valuation; capital budgeting techniques; Swedish listed companies.;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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