What Determines the Use of Capital Budgeting Methods? Evidence from Swedish listed companies
The choice of capital budgeting methods used by companies listed on the Stockholm Stock Exchange (SSE) is examined using multivariate regression analysis on questionnaire data from 2005 and 2008. Both recommended and non-recommended methods are found to be commonly used, with large companies using capital budgeting methods more frequently than small firms. The choice of capital budgeting methods is also influenced by leverage, growth opportunities, dividend pay-out ratios, the choice of target debt ratio, the degree of management ownership, foreign sales, industry, and individual characteristics of the CEO. The total use of capital budgeting methods is lower in Swedish companies compared to U.S. and continental European companies.
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