Search results
1 – 10 of over 1000
Todd M. Alessandri, Diane M. Lander and Richard A. Bettis
Strategy is ultimately aimed at creating shareholder value. We examine the relationship among intrinsic (DCF) value, market value, and the value of growth options using a “perfect…
Abstract
Strategy is ultimately aimed at creating shareholder value. We examine the relationship among intrinsic (DCF) value, market value, and the value of growth options using a “perfect foresight” model. Our findings suggest that Kester's (1984) initial assessment of growth option values may not hold under alternative valuation models. We highlight important issues in the valuation of growth options related to market expectations, modeling assumptions and estimation methods. The findings suggest that the firm's growth option value depends on three factors, each of which impacts investor expectations: (1) the macroeconomic environment; (2) the industry in which the firm participates; and (3) firm specific factors.
Donald K. Clancy and Denton Collins
The purpose of this study is to review the capital budgeting literature over the past decade.
Abstract
Purpose
The purpose of this study is to review the capital budgeting literature over the past decade.
Design/methodology
Specifically, over the years 2004–2013, we review works appearing in the major academic journals in accounting, finance, and management. Further, we review the specialized academic journals in management accounting. We examine the frequency of articles by journal and year published, the type of research method applied, and the topic area studied. We then review the research findings by topic area.
Findings
We find 110 articles appearing in the selected journals. While the articles increase in frequency, the research methods applied are predominantly analytical and archival in nature with relatively few experiments, case studies, or surveys. Some progress is observed for capital budgeting techniques and new methods for structuring uncertainty. The studies find that the size of capital budgets is about right for companies with high financial reporting quality, for liquid companies, during periods of normal cash flow, when the budget is financed by equity, for companies when they first go public or first go private. Tax rates and financial reporting methods for depreciation and tax expenses distort capital budgets. Organization structure and performance measurement can distort capital budgeting. Individual differences, especially optimism and honesty, can influence capital budgeting decisions.
Limitations and Implications
This review is limited to the major journals in accounting, finance, and management; and the specialized journals in management accounting. There is much research to be done on capital budgeting, especially case studies of actual practice and experiments related to individual and group decision processes.
Details
Keywords
The purpose of this chapter is to present the key issues and main aspects of financial management, which also constitute the main concerns of a prospective entrepreneur.
Abstract
Purpose
The purpose of this chapter is to present the key issues and main aspects of financial management, which also constitute the main concerns of a prospective entrepreneur.
Methodology/approach
This chapter takes a perspective of the small business/prospective entrepreneur and analyses how the methods, tools and techniques of financial management can be helpful in operating the business venture. Literature review was conducted on main issues and aspects of financial management.
Findings
This chapter builds on extant bibliography to discuss the key issues and main methods of financial management. For any business, irrespective of size, to carry on its operations and achieve its objectives, financial resources are required, and such resources must be managed efficiently and effectively.
Research limitations/implications
This study is explorative in nature because the discussion is mostly based on a literature review. It takes more entrepreneurial/practical than academic approach.
Practical implications
To contribute to the successful and sustainable operation of a tourism venture, this chapter outlines the key financial issues and presents in a practical way the main methods and techniques used when making operational and investment decisions.
Originality/value
This chapter attempts to equip a prospective entrepreneur with the background knowledge (main competencies), as well as the principal methods and techniques (skills) for managing the financial resources of a venture.
Details
Keywords
Kenneth D. Lawrence, Gary Kleinman and Sheila M. Lawrence
The research is directed toward the prediction of operating income within the MetLife Insurance Company. The operating income of the firm is the amount of profit realized from a…
Abstract
The research is directed toward the prediction of operating income within the MetLife Insurance Company. The operating income of the firm is the amount of profit realized from a firm’s own operation, as opposed to net income. The econometric model is based on 10 years of quarterly data (2004–2014). The explanatory variables used in this modeling effort are (1) stock price, (2) long-term borrowing, (3) capital surplus, (4) free cash flow, (5), S&P average, (6) GDP, and (7) CPI.
Details
Keywords
Despite the fact that learning the mechanics or the knowledge of how to prepare the Statement of Cash Flows (SCF) is not highly complex, students continually struggle. This paper…
Abstract
Purpose
Despite the fact that learning the mechanics or the knowledge of how to prepare the Statement of Cash Flows (SCF) is not highly complex, students continually struggle. This paper summarizes the history along with the importance and value-relevance of the SCF in practice to better inform the classroom.
Methodology/approach
Specifically, I examine pedagogies, tools, and delivery methods from previous studies and suggest areas for future education-based research studies.
Findings
The use of the SCF in practice has persisted over centuries. I explore methods of incorporating the SCF into the classroom, including the implications of McNellis (2015) and Frischmann, Pumphrey, and Santhanakrishnan (2015). I also examine the use of technology in the classroom and online delivery.
Originality/value
Academics and administrators should find this paper helpful as it provides a summary of examples for the classroom, which could lead to continuous curriculum improvement. For many universities, maintenance of program accreditation mandates assessing learning and, therefore, continuous curriculum improvement.
Details
Keywords
Budgeting process has been largely criticized in the recent accounting literature. The responsiveness of budgets to fast-moving environments is now questioned. The purpose of this…
Abstract
Budgeting process has been largely criticized in the recent accounting literature. The responsiveness of budgets to fast-moving environments is now questioned. The purpose of this paper is to address this issue by suggesting that companies use rolling forecasts as an interactive and flexible tool to cope with turbulence.
We designed a web-based survey directed to Spanish companies operating in an uncertain environment. Statistical results of the survey reveal that more than 60% of the respondents consider that changes in the environment makes it very difficult to establish accurate budgets. Respondents also mentioned that with the economic down cycle the establishment of reliable financial forecasts is requiring a great effort. At the same time, qualitative interviews have been conducted with companies already using rolling forecasts to test and further develop the use of this interactive tool.
We found that the rolling forecasts are considered to be a dynamic strategic planning tool, very useful for cash management and day-to-day decision-making process, but that they cannot replace budget for evaluation and motivation purposes.
The study has its limitations as the findings rely on a small number of survey respondents and interviewed organizations. Nevertheless the results have been compared, when possible, to those of similar surveys in order to validate them.
The article supplies actualized information about budgeting practices in a turbulent environment and more specifically in the Spanish context.