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This paper aims to examine the capital budgeting practices used by firms in Barbados using contingency theory.
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.
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.
The sample is small, and consequently, findings may not be generalisable to the population.
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.
The purpose of this paper is to investigate the current capital budgeting practices in Bangladeshi listed companies and provide a normative framework (guidelines) for…
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.
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.
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.
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.
Describes a case study in which a consultancy method based on participative business modelling was used to support strategic decision making in the field of operations. In…
Describes a case study in which a consultancy method based on participative business modelling was used to support strategic decision making in the field of operations. In this case study the Dutch client company faced serious logical and financial problems after an attempt to attain competitive advantage through drastic improvement of its delivery speed. The modelling project produced several valuable insights which have resulted in a better logistical performance at lower cost. The participative approach taken in the project has made implementation of the recommendations resulting from the project easier. It has also resulted in a better quality of systems thinking and a better understanding of the operations system throughout the company — in short, in organizational learning. This case study has been conducted within a research project aimed at the development of modelling oriented consultancy method to support strategic decision making in operations. This consultancy method is called Participative Business Modelling (PBM). Several observations made in this case study with respect to the development of this consultancy method are discussed.