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This research should help determine whether development should focus on individual firms or will raising the national development level act like a rising tide and raise the performance of all corporations.

The comparative data used in this study come from 150 Australian (ASX200 index listed) firms and 150 Sri Lankan (Colombo Stock Exchange listed) firms. The research questions are answered via a quantitative research design that uses primary and secondary data.

The findings demonstrate that capital budgeting practices are more influenced by contingency features and sophistication in Australia and Sri Lanka. Also, Australian firms tend to use capital budget models with good-to-strong predictive power (except for ROE) and Sri Lankan firms tend to use capital-budget models with fair-to-poor predictive power. Further, the analysis of Australian firms yielded much stronger and more statistically significant results than the analysis of Sri Lankan firms.

In complex real-world situations, reconciling the outputs of a multifaceted approach to capital budgeting methods is more likely to give the depth and width of input needed to achieve an optimal capital investment plan.

The results of this study can provide rich information for stakeholders about new findings in capital budgeting (CB) practices and their contributions to firm performance in a comparative perspective.

Life Cycle Costing (LCC) offers many advantages over other techniques but the time‐span over which the study must be undertaken and the uncertainty involved probably detract from its usefulness. However, this is one area where Discounted Cash Flow (DCF) techniques have great scope for application. The most important influences on decision making, in practice, are consistency and feedback; the challenge remains to prevent organisational decision making being resistant to new ideas and techniques.

The purpose of this paper is to examine the effects of audit failure on Big 4 audit firm monitoring activities. The paper analyzes changes in discretionary accruals (DAs) among clients of firms implicated in audit failure events and examines whether these DAs decline in the period following the event.

The paper uses archival data and regression analyses to test whether DAs for clients of implicated audit firms decline in the period following the audit failure as compared to clients of other Big 4 firms. Audit failures are identified during the years 1996‐2004 based on significant lawsuit settlements. The paper focuses on an office‐level analysis to control for audit quality differences which may vary across firm geographic locations as suggested by recent research.

Empirical results indicate that auditor response to audit failure has changed over time. Auditors implicated in audit failure events occurring in the post‐Enron and Sarbanes‐Oxley period enforce more conservative accounting choices in the year following the event. Specifically, clients of the implicated firm's office report a significant decline in discretionary accounting accruals relative to clients of other auditors in the same city location. However, a significant change in client discretionary accounting accruals is not found following audit failures that occurred prior to 2001, the year of the Enron bankruptcy.

The results of this paper extend the knowledge of the effects of litigation pressure on audit quality. Additionally, this paper helps address the question of how large‐scale audit failures witnessed at the beginning of the century have impacted audit firm conservatism.

Mergers and acquisitions strategies are not risk-free, potential problems in achieving success include integration difficulties, inadequate evaluation of target, inability to achieve synergy, and complexity. Such strategies can fail for many reasons including inadequate evaluation of targets or inadequate pre-decision control mechanisms. Mergers and acquisitions are reviewed in this chapter as strategic investment decision-making perspective. Established financial analyses remain important in appraising investment choices, despite their limiting assumptions and their recognised shortcomings in capturing strategic project dimensions. However, managers balance these economic analyses with less-structured, strategic analyses underpinned by informed judgement. The fact that empirical studies reveal a continued reliance on judgement by investment decision-makers does not mean that rational economic analysis is a futile exercise. What studies of practice do seem to suggest is that the theory and practice of strategic investment decision-making need to take into account both economically rational and intuitive decision processes. Reflecting on the research evidence, we conclude that strategic investment appraisal will be best supported by approaches that (i) couple sound economic analysis with the development of managerial judgement and (ii) take account of the broader decision-making context within which both economic and strategic analyses are used.

Carries out a study which empirically examines both internal and external auditors in New Zealand to determine the extent to which 21 audit supervisory tools were used in audit practice. In addition to determining how frequently each of the supervisory techniques was used, the study tested two hypotheses. The first hypothesis was that the statistical variance for the number of audit supervisory techniques used on internal audits is greater than that for external audits. The second hypothesis was that the average number of audit supervisory techniques used on external audits is greater than that for internal audits, suggesting that external audits are more closely supervised than are internal audits. Both hypotheses were supported by the study data. In addition, supervisory profiles were constructed for both internal and external audits. The profiles indicated that while external audits appear to use more supervisory techniques during the course of the audit due to greater liability and competitive pressure, internal audits are more likely to require closer supervision of the release of audit reports and audit follow‐up.

The purpose of this paper is to examine whether comments made by Big‐Six auditors about their post‐audit perceptions of the client's integrity were influenced by their firm's rating of the client's integrity prior to the start of the current audit.

The paper uses an established fraud detection case study with a manipulation of client integrity. The participants include 152 managers and 342 seniors from five of the then Big‐Six firms.

The findings indicates that auditors were insensitive to client integrity ratings in the audit planning/risk assessment stage of the audit.

The very foundation of corporate governance and the value of the audit are weakened when client integrity is questionable and may not result in implementing more rigorous audit procedures suggested by Mautz and Sharaf.

The existent literature cannot be used to determine whether or not Auditing Standards enacted since 1991 have had any effect on the practice of auditing in this area. Consequently, this paper contributes to the literature by establishing a 1991 (i.e. before Statement of Auditing Standards 82) baseline for evaluation purposes. (A baseline being a point of reference to compare the results of future research.)

Asks which of the following three levers is the single most important in driving shareholder value in acquisitions?: price; strategy; and post‐deal management. Argues all of the three above levers are important but, on the basis of research, believes only the final one has really made a difference in determining the odds of success in the major deals of the last decade.

The purpose of this paper is to report on research in applying the financial appraisal profile (FAP) model to an information communication technology project within a professional association and to evaluate the model's effectiveness and acceptability.

The FAP model incorporates both rationalistic and hermeneutic paradigms. An action research/single case study approach has been use to “evaluate” the model in a real life situation.

It is shown that the model addresses many of the issues it set out to address and is perceived by both senior and corporate management as an effective tool in the evaluation of capital assets such as information technology (IT) projects. Important issues regarding, what has been termed, “groupthink” and the influence of a “project champion” on the evaluation of capital projects are also highlighted. The inclusion of what has been termed “the IT score” further enhances the models applicability to IT projects.

Although the practical application of the model provides credible evidence for its pragmatic support, this is limited by the fact that it is based on a single case study.

It is hoped that practitioners will find the FAP model more pragmatic than their existing capital investment appraisal methods/procedures and that it will result in improved decision making.

The FAP model is a new concept and this is the first study in applying this model to an actual real life capital project. It also shows how a Delphi approach can be used in a practical setting.

The purpose of this paper is to develop a framework for an enlightened management and governance praxis against a backdrop of cognitive and motivational biases promoting a reflected international capital budgeting decision process. Furthermore, societally relevant questions are raised whether these biases might have an effect on various stakeholders in public–private partnerships. Recurring failures of international business investments motivate reflective, cognitive and socio-constructivist perspectives on the international capital budgeting process.

Based on an interdisciplinary literature review and substantiated by empirical studies, the cognitive biases and flaws of the international capital budgeting process are discussed making use of a five-stage process scheme. The article applies the interpretative paradigm and regards the international capital budgeting process stages as a socio-political process of reality construction and critically assesses the motives of its actors. Consequently, the authors develop and discuss three principle-based behavioural rationalisation factors.

International capital budgeting is not a process of rational choice but of social construction of reality. Reflective prudence, critical communication and independence are three rationalisation factors which could, if applied along the five stages of the international capital budgeting process, systematically lead to de-biasing and thus enhance the performative praxis of international investment decisions.

The international capital budgeting process deals with the construction of future scenarios under uncertainty and assessment of potential success and failure of future projects. The defined (or any other) rationalisation factors are subject to cultural biases and can naturally not guarantee successful investment projects. Although the success of the application of various de-biasing tactics was empirically confirmed, the aggregated rationalisation factors of the paper have not been tested.

The paper is aimed at enhancing the reflective understanding and the performative praxis of the international capital budgeting process. The practical recommendations aggregated in the rationalisation factors are explicitly elaborated for international business practitioners.

Societally relevant questions are raised whether systematic biases have an effect on various stakeholders in international public–private partnerships. Especially in large investment projects, where capturing private value might be boosted by actively exploiting biases of the public decision makers, active stakeholder engagement could enhance the social and ecological value of investments.

The article provides a rare interdisciplinary literature review on cognitive biases in the international capital budgeting process. It critically reflects the social construction of it various stages and its social repercussions and develops practical rationalisation factors for an enhancement of the international capital budgeting process as a performative praxis.

The purpose of this paper is to investigate property investment decision making by Australian REITs.

Through an extensive literature review, a normative model of the property investment decision-making process is proposed. Based on semi-structured interviews with senior Australian REIT decision makers, a descriptive model of the property investment decision-making process by Australian REITs is developed. The normative model and descriptive model are compared and a prescriptive model of the Australian REIT property investment decision-making process proposed.

With the four stage, 20-step process proposed in the normative model found to be generally supported by the descriptive model developed, this may potentially comprise an effective prescriptive model for the Australian REIT property investment decision-making process.

Further research is required to investigate if the prescriptive model is generalisable across other property investment decision-making groups or over time and whether it may lead to “good” decisions.

The prescriptive model proposed may contribute consistency and transparency to the decision-making process, if adopted by Australian REITs, potentially leading to better decisions.

Greater consistency and transparency in property investment decision making by Australian REITs may lead to the optimal allocation of capital and greater investor confidence in the sector.

The findings comprise the first prescriptive model of the Australian REIT property investment decision-making process, forming a basis for comparative investigation of that process adopted by other property investment decision-making groups.