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Article
Publication date: 1 January 1987

James C. Baker

Capital budgeting has been a major topic of the finance literature since Joel Dean's book was published in 1951. Since then, several books and dozens of articles have been…

Abstract

Capital budgeting has been a major topic of the finance literature since Joel Dean's book was published in 1951. Since then, several books and dozens of articles have been published about every aspect of this finance function. So many surveys of capital budgeting techniques used by companies have been administered by researchers that even the surveys have been evaluated.

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Managerial Finance, vol. 13 no. 1
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 January 1981

James C. Baker

Introduction Since 1951, the subject of capital budgeting has become deeply entrenched in the literature of financial management. Since Joel Dean's pioneering text (1951…

Abstract

Introduction Since 1951, the subject of capital budgeting has become deeply entrenched in the literature of financial management. Since Joel Dean's pioneering text (1951) many articles and books devoted to theoretical conceptualisation and empirical research have been published. In general, along with the growth in the literature of capital budgeting, it appears that usage of more sophisticated capital budgeting techniques has increased. Discounted cash flow (DCF) techniques, in particular, seem to be used more and more by large companies especially. This observation might be expected in view of the increasing sophistication in managerial analysis, computers, application of management science and quantitative methods, and the increasing complexity of worldwide business operations in general. Business firms in the US, Europe, and elsewhere, continue to search for those analytical techniques which will lead to an increase in shareholder wealth or maximum profits.

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Management Decision, vol. 19 no. 1
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 1 April 1995

James C. Baker

This special issue is devoted to a discussion of some major risks facing multinational companies (MNCs) in the operation of their global business. Multinational business…

Abstract

This special issue is devoted to a discussion of some major risks facing multinational companies (MNCs) in the operation of their global business. Multinational business is carried out in many ways including international trade and investment activities. Such enterprise may be confronted by a number of risks. Among these, the most important are foreign exchange risk, credit risk, interest rate risk, and political risk.

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Managerial Finance, vol. 21 no. 4
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 April 1995

James C. Baker

The World Bank established the Multilateral Investment Guarantee Agency (MIGA) in 1985 as the first truly global agency which insures foreign investments against political…

Abstract

The World Bank established the Multilateral Investment Guarantee Agency (MIGA) in 1985 as the first truly global agency which insures foreign investments against political risks. MIGA is now in its fifth full year of operations and has been more successful than originally forecast. This paper will discuss the formation of MIGA and includes an analysis of its operations to date. When appropriate, comparisons will be made between MIGA operations and those of the U.S. investment insurance agency, OPIC, the Overseas Private Investment Company, as well as private market insurers. Selected cases of MIGA guarantees are discussed in the paper.

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Managerial Finance, vol. 21 no. 4
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 March 1973

James C. Baker and John K. Ryans

Much attention has been focused recently on the increased overseas business of United States corporations, the growth of the multinational firm and similar international…

Abstract

Much attention has been focused recently on the increased overseas business of United States corporations, the growth of the multinational firm and similar international developments. Understandably, this has attracted marketers' interest in management policies and practices relating to overseas advertising, distribution channels, and product planning.

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Management Decision, vol. 11 no. 3
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 1 November 1999

James C. Baker

Outlines the formation, structure and powers of the European Central Bank, which has the objective of maintaining price stability. Discusses its implementation of monetary…

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Abstract

Outlines the formation, structure and powers of the European Central Bank, which has the objective of maintaining price stability. Discusses its implementation of monetary policy and considers both actual and potential problems in terms of its independence, leadership, interest rate management, co‐ordination with national fiscal authorities, transparency of operations and cross‐border settlement systems. Criticizes its limited powers for prudential supervision of banks in the EMU and suggests that it needs wider objectives, more authority and greater independence from national influences.

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Managerial Finance, vol. 25 no. 11
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 February 1990

Marjorie T. Stanley

The concept of a company's cost of capital is used in capital budgeting as a potential basic discount rate to be applied to expected future cash flows from a proposed…

Abstract

The concept of a company's cost of capital is used in capital budgeting as a potential basic discount rate to be applied to expected future cash flows from a proposed investment project being subjected to evaluation for acceptance or rejection. Discounted‐cash‐flow capital budgeting techniques derive from valuation theory that determines present value of expected future cash flows by discounting them down to the present at a discount rate appropriate to the degree of risk involved. Conceptually, this is true with regard to both domestic investment and foreign direct investment. However, there is recognition in the literature that capital budgeting for foreign direct investment decisions may involve complexities not present in the domestic case. These include economic, financial, and political factors, and related risks, e.g., foreign exchange risk, blocked currencies, expropriation. On the other hand, foreign direct investment is thought to provide diversification benefits, so that risks that are not domestically diversifiable are internationally diversifiable, thereby eliminating some otherwise systematic risk. Complexities such as these place a considerable burden upon the concept of cost of capital as a discount rate appropriately reflective of the degree of risk involved in a foreign direct investment project. Furthermore, cost of capital may be affected by environmental factors associated with what country the parent corporation calls “home” (Stonehill and Dullum).

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Managerial Finance, vol. 16 no. 2
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 January 2003

WALI I. MONDAL

Bangladesh achieved its independence in 1971. Since that time, the country has gone through several major policy changes regarding the ownership and control of industries…

Abstract

Bangladesh achieved its independence in 1971. Since that time, the country has gone through several major policy changes regarding the ownership and control of industries with a view to promoting economic growth. One of the strategies the Government of Bangladesh (GOB) followed to accelerate economic growth was to attract foreign direct investment (FDI) into the country. Immediately after the independence, the Government obtained control of a large number of industries abandoned by non‐Bangladeshi owners. Through the Nationalization Order of 1972, all key industries including jute, cotton textiles and sugar were vested upon the public sector. The wholesale nationalization of industries resulted in a low growth of the economy. The Gross National Product (GNP) per capita of the country grew at an average annual rate of 0.4 per cent until 1985 compared to 3.8 per cent for the group of “low income countries” (The World Development Report, 1989). The low growth performance of the economy put pressures on GOB to privatise major industries and to undertake economic reforms. As Karim (1996) mentions, external pressure from donors had a significant impact on the Government's investment policy. As a result, the GOB has taken a number of measures to attract FDI including the establishment of the Board of Investment (BOI) and wide publicity in foreign countries. Many believe that GOB has maintained an over‐valued exchange rate in order to attract FDI. These policy changes, along with other traditional factors (such as financial, political, regulatory and tax risks) have significant impact on foreign direct investment (FDI) in Bangladesh.

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Studies in Economics and Finance, vol. 21 no. 1
Type: Research Article
ISSN: 1086-7376

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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.

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

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Article
Publication date: 1 February 1974

A. Coskun Sanli

Explores, within the framework of international research, product, distribution and price. Investigates the behaviour of large US firms with a view to identifying and…

Abstract

Explores, within the framework of international research, product, distribution and price. Investigates the behaviour of large US firms with a view to identifying and difference in growth rates to their counterparts. Examines the relationship between fast growth of the corporate entity as a whole and its international marketing orientation.

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European Journal of Marketing, vol. 8 no. 2
Type: Research Article
ISSN: 0309-0566

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