IDEAS home Printed from https://ideas.repec.org/a/fgv/eaerae/v54y2014i5a32839.html
   My bibliography  Save this article

Listagem em bolsa induz sofisticação do orçamento de capital

Author

Listed:
  • Mendes-da-Silva, Wesley
  • Saito, Richard

Abstract

This article compares capital budgeting techniques employed in listed and unlisted companies in Brazil. We surveyed the Chief Financial Officers (CFOs) of 398 listed companies and 300 large unlisted companies, and based on 91 respondents, the results suggest that the CFOs of listed companies tend to use less simplistic methods more often, for example: NPV and CAPM, and that CFOs of unlisted companies are less likely to estimate the cost of equity, despite being large companies. These findings indicate that stock exchange listing may require greater sophistication of the capital budgeting process.

Suggested Citation

  • Mendes-da-Silva, Wesley & Saito, Richard, 2014. "Listagem em bolsa induz sofisticação do orçamento de capital," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 54(5), September.
    • Handle: RePEc:fgv:eaerae:v:54:y:2014:i:5:a:32839
    as

    Download full text from publisher

    File URL: http://bibliotecadigital.fgv.br/ojs/index.php/rae/article/view/32839
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dirk Brounen & Abe de Jong & Kees Koedijk, 2004. "Corporate Finance in Europe: Confronting Theory with Practice," Financial Management, Financial Management Association, vol. 33(4), Winter.
    2. Schall, Lawrence D & Sundem, Gary L & Geijsbeek, William R, Jr, 1978. "Survey and Analysis of Capital Budgeting Methods," Journal of Finance, American Finance Association, vol. 33(1), pages 281-287, March.
    3. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    4. H. Kent Baker & Tarun K. Mukherjee, 2007. "Survey research in finance: views from journal editors," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 3(1), pages 11-25, January.
    5. Trahan, Emery A. & Gitman, Lawrence J., 1995. "Bridging the theory-practice gap in corporate finance: A survey of chief financial officers," The Quarterly Review of Economics and Finance, Elsevier, vol. 35(1), pages 73-87.
    6. Colin Drury & Mike Tayles, 1996. "UK capital budgeting practices: some additional survey evidence," The European Journal of Finance, Taylor & Francis Journals, vol. 2(4), pages 371-388.
    7. Graham, John R. & Harvey, Campbell R., 2001. "The theory and practice of corporate finance: evidence from the field," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 187-243, May.
    8. Karyn L. Neuhauser, 2007. "Survey research in finance," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 3(1), pages 5-10, January.
    9. John Graham & Campbell Harvey, 2002. "HOW DO CFOs MAKE CAPITAL BUDGETING AND CAPITAL STRUCTURE DECISIONS?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 15(1), pages 8-23, March.
    10. Hermes, Niels & Smid, Peter & Yao, Lu, 2007. "Capital budgeting practices: A comparative study of the Netherlands and China," International Business Review, Elsevier, vol. 16(5), pages 630-654, October.
    11. Cassimon, D. & De Backer, M. & Engelen, P.J. & Van Wouwe, M. & Yordanov, V., 2011. "Incorporating technical risk in compound real option models to value a pharmaceutical R&D licensing opportunity," Research Policy, Elsevier, vol. 40(9), pages 1200-1216.
    12. Scott, David F, Jr & Petty, J William, II, 1984. "Capital Budgeting Practices in Large American Firms: A Retrospective Analysis and Synthesis," The Financial Review, Eastern Finance Association, vol. 19(1), pages 111-123, March.
    13. John R. Graham, 2011. "Using CFO Surveys as a Motivational Tool to Teach Corporate Finance," The Financial Review, Eastern Finance Association, vol. 46(2), pages 193-205, May.
    14. Brounen, D. & de Jong, A. & Koedijk, C.G., 2004. "Corporate Finance In Europe Confronting Theory With Practice," ERIM Report Series Research in Management ERS-2004-002-F&A, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    15. Les Coleman, 2007. "Risk and decision making by finance executives: a survey study," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 3(1), pages 108-124, January.
    16. Marcos Alencar Abaide Balbinotti & Cristiane Benetti & Paulo Renato Soares Terra, 2007. "Translation and validation of the Graham‐Harvey survey for the Brazilian context," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 3(1), pages 26-48, January.
    17. Editors The, 2007. "From the Editors," Basic Income Studies, De Gruyter, vol. 2(1), pages 1-5, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sureka, Riya & Kumar, Satish & Colombage, Sisira & Abedin, Mohammad Zoynul, 2022. "Five decades of research on capital budgeting – A systematic review and future research agenda," Research in International Business and Finance, Elsevier, vol. 60(C).
    2. Siziba, Simiso & Hall, John Henry, 2021. "The evolution of the application of capital budgeting techniques in enterprises," Global Finance Journal, Elsevier, vol. 47(C).
    3. Hermes, Niels & Smid, Peter & Yao, Lu, 2007. "Capital budgeting practices: A comparative study of the Netherlands and China," International Business Review, Elsevier, vol. 16(5), pages 630-654, October.
    4. Peter Markovič & Michal Šinský, 2009. "Trends in application of capital budgeting methods for investment projects evaluation," Ekonomika a Management, Prague University of Economics and Business, vol. 2009(1).
    5. Tor Brunzell & Eva Liljeblom & Mika Vaihekoski, 2013. "Determinants of capital budgeting methods and hurdle rates in Nordic firms," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(1), pages 85-110, March.
    6. Hoang, Daniel & Gatzer, Sebastian & Ruckes, Martin E., 2018. "The economics of capital allocation in firms: Evidence from internal capital markets," Working Paper Series in Economics 115, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    7. Chittenden, Francis & Derregia, Mohsen, 2015. "Uncertainty, irreversibility and the use of ‘rules of thumb’ in capital budgeting," The British Accounting Review, Elsevier, vol. 47(3), pages 225-236.
    8. Andor, Gyorgy & Mohanty, Sunil K. & Toth, Tamas, 2015. "Capital budgeting practices: A survey of Central and Eastern European firms," Emerging Markets Review, Elsevier, vol. 23(C), pages 148-172.
    9. Kent Baker & Shantanu Dutta & Samir Saadi, 2011. "Corporate Finance Practices in Canada: Where Do We Stand?," Multinational Finance Journal, Multinational Finance Journal, vol. 15(3-4), pages 157-192, September.
    10. Brounen, Dirk & de Jong, Abe & Koedijk, Kees, 2006. "Capital structure policies in Europe: Survey evidence," Journal of Banking & Finance, Elsevier, vol. 30(5), pages 1409-1442, May.
    11. Riya Sureka & Satish Kumar & Deepraj Mukherjee & Christina Theodoraki, 2023. "What restricts SMEs from adopting sophisticated capital budgeting practices?," Small Business Economics, Springer, vol. 60(1), pages 265-290, January.
    12. repec:dgr:rugsom:06e02 is not listed on IDEAS
    13. Robert W Faff & Stephen Gray & Kelvin Jui Keng Tan, 2016. "A contemporary view of corporate finance theory, empirical evidence and practice," Australian Journal of Management, Australian School of Business, vol. 41(4), pages 662-686, November.
    14. Weber, Thomas A., 2014. "On the (non-)equivalence of IRR and NPV," Journal of Mathematical Economics, Elsevier, vol. 52(C), pages 25-39.
    15. Hess, Dieter & Immenkötter, Philipp, 2014. "How much is too much? Debt capacity and financial flexibility," CFR Working Papers 14-03, University of Cologne, Centre for Financial Research (CFR).
    16. Magni, Carlo Alberto, 2007. "Project valuation and investment decisions: CAPM versus arbitrage," MPRA Paper 14525, University Library of Munich, Germany.
    17. Gatzer, Sebastian & Hoang, Daniel & Ruckes, Martin, 2015. "Internal Capital Markets and Diversified Firms: Theory and Practice," EconStor Preprints 169432, ZBW - Leibniz Information Centre for Economics.
    18. Guedes, José & Santos, Pedro, 2016. "Valuing an offshore oil exploration and production project through real options analysis," Energy Economics, Elsevier, vol. 60(C), pages 377-386.
    19. Koedijk, Kees & Mahieu, Ronald & van Toor, Joris & Horst, Jenke, 2017. "The World We Live In: Local or Global?," CEPR Discussion Papers 11831, C.E.P.R. Discussion Papers.
    20. Marcin Pawlak & Dariusz Zarzecki, 2020. "Investment Appraisal Practice in the European Union Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 687-699.
    21. Osborne, Michael J., 2010. "A resolution to the NPV-IRR debate?," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(2), pages 234-239, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fgv:eaerae:v:54:y:2014:i:5:a:32839. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Núcleo de Computação da FGV EPGE (email available below). General contact details of provider: https://edirc.repec.org/data/eagvfbr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.