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Capital Budgeting Theory and Practice: A Review and Agenda for Future Research

Author

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  • Lingesiya Kengatharan

Abstract

The main purpose of this research was to delineate unearth lacunae in the extant capital budgeting theory and practice during the last two decades and ipso facto become springboard for future scholarships. Web of science search and iCat search were used to locate research papers published during the last twenty years. Four criteria have been applied in selection of research papers: be an empirical study, published in English language, appeared in peer reviewed journal and full text research papers. These papers were collected from multiple databases including OneFile (GALE), SciVerse ScienceDirect (Elsevier), Informa - Taylor & Francis (CrossRef), Wiley (CrossRef), Business (JSTOR), Arts & Sciences (JSTOR), Proquest ,MEDLINE (NLM), and Wiley Online Library. Search parameters covered capital budgeting, capital budgeting decision, capital budgeting theory, capital budgeting practices, capital budgeting methods, capital budgeting models, capital budgeting tools, capital budgeting techniques, capital budgeting process and investment decision. Thematic text analyses have been explored to analyses them. Recent studies lent credence on the use of more sophisticated capital budgeting techniques along with many capital budgeting tools for incorporating risk. Notwithstanding, it drew a distinction between developed and developing countries. Moreover, factors impinging on choice of capital budgeting practice were identified, and bereft of behavioral finance and event study methodological approach were highlighted. More extensive studies are imperative to build robust knowledge of capital budgeting theory and practice in the chaotic environment. This research was well thought out in its design and contributed by stating the known and unknown arena of capital budgeting during the last two decades. This scholarship facilitates to academics, practitioners, policy makers, and stakeholders of the company.

Suggested Citation

  • Lingesiya Kengatharan, 2016. "Capital Budgeting Theory and Practice: A Review and Agenda for Future Research," Applied Economics and Finance, Redfame publishing, vol. 3(2), pages 15-38, May.
  • Handle: RePEc:rfa:aefjnl:v:3:y:2016:i:2:p:15-38
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    Citations

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    Cited by:

    1. Sardaro, Ruggiero & Bozzo, Francesco & Petrillo, Francesco & Fucilli, Vincenzo, 2017. "Measuring the financial sustainability of vine landraces for better conservation programmes of Mediterranean agro-biodiversity," Land Use Policy, Elsevier, vol. 68(C), pages 160-167.
    2. Luigi Roselli & Arturo Casieri & Bernardo Corrado de Gennaro & Ruggiero Sardaro & Giovanni Russo, 2020. "Environmental and Economic Sustainability of Table Grape Production in Italy," Sustainability, MDPI, vol. 12(9), pages 1-24, May.
    3. Siziba, Simiso & Hall, John Henry, 2021. "The evolution of the application of capital budgeting techniques in enterprises," Global Finance Journal, Elsevier, vol. 47(C).
    4. 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).
    5. Ahmad N. H. Anabtawi, 2018. "The Extent of Using and Trusting Capital Budgeting Methods in Projects Appraisal in Palestinian Corporations," Modern Applied Science, Canadian Center of Science and Education, vol. 12(6), pages 151-151, June.

    More about this item

    Keywords

    Capital budgeting theory and practices; capital budgeting tools for incorporating risk; discount rate;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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