Capital budgeting practices: A comparative study of the Netherlands and China
AbstractThis paper compares the use of capital budgeting techniques of Dutch and Chinese firms, using data obtained from a survey among 250 Dutch and 300 Chinese companies. Our main aim is to analyse the use of capital budgeting techniques by companies in both countries from a comparative perspective to see whether economic development matters. The empirical analysis provides evidence that Dutch Chief Financial Officers (CFOs) on average use more sophisticated capital budgeting techniques than Chinese CFOs do. At the same, however, our results suggest that the difference between Dutch and Chinese firms is smaller than might have been expected based upon the differences in the level of economic development between both countries, at least with respect to the use of methods of estimating the cost of capital and the use of CAPM as the method of estimating the cost of equity.
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Bibliographic InfoArticle provided by Elsevier in its journal International Business Review.
Volume (Year): 16 (2007)
Issue (Month): 5 (October)
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Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/description#description
Other versions of this item:
- Smid, P. & Yao, L. & Hermes, N., 2006. "Capital Budgetting Practices: A comparative Study of the Netherlands and China," Research Report 06E02, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
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