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Article
Publication date: 16 August 2021

Mattias Haraldsson

The aim of this paper is to explore whether and how external, political, financial and governance factors influence capital expenditure deviations in the Swedish municipal…

Abstract

Purpose

The aim of this paper is to explore whether and how external, political, financial and governance factors influence capital expenditure deviations in the Swedish municipal water and sewerage sector and to capture the consequences of municipal organisational fragmentation.

Design/methodology/approach

Panel data analysis of 238 municipalities and 1,190 observations of capital expenditure deviations over five years (2013–2017).

Findings

Apart from a low overall on average execution rate of 69%, the Swedish municipal water and sewerage sector seems generally sensitive to external stakeholder pressure for budget compliance, but not to the political power situation. Further, political signalling incentives generally do not influence capital expenditure deviations in the contexts of municipal corporations and cooperations, which supports the idea that these governance forms insulate the organisation from general stakeholder pressure and political control.

Practical implications

The practical implication is that large and constant capital expenditure deviations call for change in regulation and governance of the municipal sector. However, in countries such as Sweden, where externalising services to municipal corporations and cooperations is significant, this discussion needs to address the consolidated level of the municipality. Otherwise, a large share of the investment budget will be unscrutinised. More closely related to the Swedish water and sewerage sector, the risks associated with a constantly low execution rate should be analysed and addressed.

Originality/value

First, this paper contributes to the knowledge of aggregated capital expenditure deviations in general and specifically within the municipal water and sewerage sector. Second, analysing the municipal governance landscape adds further insights and suggestions on why budget performance varies. The results especially highlight that the governance forms of corporations and cooperations change the relation to political signalling incentives.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1096-3367

Keywords

Abstract

Details

Public-Private Partnerships, Capital Infrastructure Project Investments and Infrastructure Finance
Type: Book
ISBN: 978-1-83909-654-9

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Abstract

Details

Public-Private Partnerships, Capital Infrastructure Project Investments and Infrastructure Finance
Type: Book
ISBN: 978-1-83909-654-9

To view the access options for this content please click here
Article
Publication date: 1 January 1996

Suk H. Kim and Gregory Ulferts

A quarter of a century has passed since Stonehill and Nathanson (1968) surveyed multinational companies to determine their foreign capital budgeting practices. Since then…

Abstract

A quarter of a century has passed since Stonehill and Nathanson (1968) surveyed multinational companies to determine their foreign capital budgeting practices. Since then, research has not only refined its theoretical base on this subject but also expanded the knowledge of actual practices by multinational companies. This article summarizes the findings of major multinational capital budgeting studies for the last 25 years to ascertain whether companies followed theoretically prescribed approaches. Then, it suggests further research to advance the knowledge on this subject.

Details

Managerial Finance, vol. 22 no. 1
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 5 April 2021

Md. Anhar Sharif Mollah, Md. Abdur Rouf and S.M. Sohel Rana

The purpose of this paper is to investigate the current capital budgeting practices in Bangladeshi listed companies and provide a normative framework (guidelines) for…

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Abstract

Purpose

The purpose of this paper is to investigate the current capital budgeting practices in Bangladeshi listed companies and provide a normative framework (guidelines) for practitioners.

Design/methodology/approach

Data were collected with a structured questionnaire survey taking from the chief financial officers (CFOs) of companies listed in the Dhaka Stock Exchange in Bangladesh. Garnered data were then analyzed using descriptive and inferential statistical techniques.

Findings

The results found that net present value was the most prevalent capital budgeting method, followed closely by internal rate of return and payback period. Similarly, the weighted average cost of capital was found to be the widely used method for calculating cost of capital. Further, results also revealed that CFOs adjust their risk factor using discount rate.

Originality/value

The findings of this study might help the firms, policymakers and practitioners to take a wise decision while evaluating investment projects. Additionally, this study’s findings enrich the existing body of knowledge in the field of capital budgeting practices by providing more reliable and comprehensive analysis taking samples from a developing economy.

Details

PSU Research Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2399-1747

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Article
Publication date: 1 March 2003

Jane Beckett-Camarata

Strategic planning in all sectors of government is currently experiencing greater use. Strategic planning in the federal government, for example, is now mandated and the…

Abstract

Strategic planning in all sectors of government is currently experiencing greater use. Strategic planning in the federal government, for example, is now mandated and the emphasis is on “managing for results” (Roberts, 2000). At the same time, capital budgeting in all sectors of government is also receiving greater attention because of the recognition of greater need for attention to funding infrastructure. In this study, the relationship between the municipal strategic plan and the capital budget and their effect on financial performance is examined. Based on the analysis, the strategic plan, when connected to the capital budget, was found to have a statistically significant effect on selected aspects of municipal financial performance. The findings for practitioners indicate that strategic planning and capital budgeting are a major influence on financial performance and that the combination of capital budgeting and strategic planning constitutes a strategic decision-making process.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 15 no. 1
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 March 2013

Il Hwan Chung

Adoption of a separate capital budget in local governments receives little attention in the literature. It is important to look at various capital budgeting practices in…

Abstract

Adoption of a separate capital budget in local governments receives little attention in the literature. It is important to look at various capital budgeting practices in local governments since a separate capital budget as different budget format and structure affects budgetary decisions, thus leading to different levels of investment in public infrastructure. This paper examines factors that facilitate or impede adoption of a separate capital budget by using time series data. Results show that local governments are more likely to adopt a separate capital budget in order to reflect local demands such as growth rate in capital spending.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 25 no. 4
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 16 March 2010

Basheer Ahmad Khamees, Nedal Al‐Fayoumi and Ali A. Al‐Thuneibat

The purpose of this paper is to provide additional empirical evidence about capital budgeting practices in an emerging economy.

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3004

Abstract

Purpose

The purpose of this paper is to provide additional empirical evidence about capital budgeting practices in an emerging economy.

Design/methodology/approach

The study utilizes a questionnaire and interview to collect data from respondents.

Findings

The results show that the JIC give almost equal importance to the discounted and undiscounted cash flow methods in evaluating capital investment projects. It appeared also that the most frequent used technique is the profitability index followed by the payback period.

Practical implications

Based on these results, the researchers recommend putting a great attention to apply the concepts and techniques of capital budgeting in an appropriate manner. The corporations should also consider importance of information technology and its applications in capital budgeting.

Originality/value

This is the first study applied on the capital budgeting practices and its related issues in the JIC.

Details

International Journal of Commerce and Management, vol. 20 no. 1
Type: Research Article
ISSN: 1056-9219

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Article
Publication date: 1 March 2017

Juita-Elena (Wie) Yusuf and Arwiphawee (Sai) Srithongrung

This article highlights key aspects of capital management, including capital planning, capital budgeting, capital financing, decision making and capital spending outcomes…

Abstract

This article highlights key aspects of capital management, including capital planning, capital budgeting, capital financing, decision making and capital spending outcomes. We provide a background discussion of public sector capital management, followed by a summary of the articles that comprise this symposium. Combined, these articles illustrate the complexity of and challenges to capital management at the state and local government levels. We discuss common themes that emerge from reading these articles as a collective symposium, including: (1) modest progress in applying and empirically testing theoretical frameworks; (2) the variety of actors and institutions; and (3) the deteriorating condition and poor performance of public infrastructure. We use the articles to illustrate gaps in the research and offer suggestions for future research on capital management theory and practice.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 29 no. 2
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 3 December 2018

Philmore Alleyne, Shantelle Armstrong and Marissa Chandler

This paper aims to examine the capital budgeting practices used by firms in Barbados using contingency theory.

Abstract

Purpose

This paper aims to examine the capital budgeting practices used by firms in Barbados using contingency theory.

Design/methodology/approach

The study involves the use of a self-administered questionnaire sent to the individual responsible for capital budgeting decisions (either the accountant, financial controller or senior manager) in each of the firms selected. In total, 41 completed questionnaires are received; 12 follow-up interviews are conducted with respondents to indicate the reasons for use and non-use of capital budgeting practices.

Findings

Capital budgeting practices are not widely used by firms in Barbados. The payback method (PBM) is determined to be the preferred method of choice because of its simplicity, agility and cultural practices. Based on contingency theory, organisations in Barbados believe that the PBM is a better fit for them. Top management drives the capital budgeting process with crude and non-traditional methods for the acceptance of capital projects. While there are no statistically significant differences in the capital budgeting practices used in different sectors, professional accountants are more likely to use net present value and sensitivity analysis than non-professional accountants.

Research limitations/implications

The sample is small, and consequently, findings may not be generalisable to the population.

Originality/value

This study makes a significant contribution to the body of literature in emerging countries such as Barbados on the usage of capital budgeting practices and factors that may influence their usage. It further contributes to policymakers, practitioners, organisations and stakeholders of organisations.

Details

Journal of Financial Reporting and Accounting, vol. 16 no. 4
Type: Research Article
ISSN: 1985-2517

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