Literature Review
The most important decisions that a financial manager face is the proper allocation or budgeting of their capital. P A Ryan, & G P Ryan, R yan, G. (2002). Capital Budgeting Practices of the Fortune 1000: How Have Things Changed? Journal of Business and Management, in their studies shows that the financial manager prefers IRR and non-discounted payback models over net present value. In our study we would show what methods are tend to be used by our financial managers in different industry. And try to find out whether they use multiple methods to get the optimal methods. Pike, R. (1996). A Longitudinal Survey on Capital Budgeting Practices. Journal of Business Finance & Accounting, in his study he said capital budgeting does not have the intention to present the current position positi on rather than it tries to find relations between investment practices and organizational variables for example firm size, capital intensity and environmental uncertainty and performance. In our study, we also want to find out what is the importance of capital budgeting in our arena for practicing or running business. And also want to find out how capital budgeting effects the performance of the firm. Andor, G., K. Mohanty, S., & Toth, T. (2011). Capital Budgeting Practices: A Survey of Central and Eastern European Firms. In this paper, they reported that they get the surve y results from executives of companies I ten countries in Central and Eastern Europe (CEE) – Bulgaria, Bulgaria, Croatia, Csech Republic, Hungary, Lativa, Lithunia, Poland, Romania, Slovak Republic, and Slovenia regarding their capital budgeting budgeting practices. The findings of their survey indicate that capital budgeting practices in Central Eastern European (CEE) countries tend to be influenced mostly by firm size and multinational culture. In our study we would like to show the capital budgeting practices of different firms rather than different country. And would also try to find out influential factor of capital budgeting practices. Bennouna, K., G. Meredith, G., & Marchant, T. (2010). Improved capital budgeting decision making: evidence from Canada. Management Decision, 48(2), 48(2), 225-247. In this article the authors tries to evaluate current techniques in capital budget decision decisi on making in Canada. They also figured out the fact that sound financial management and capital investment decision making are critical factors for survival and long-term success for firms. Our study also show that sound financial management lead to long-term success of the firm. Yasmin, S. (2015). Capital Budgeting in Practice: An Explorative Study on Bangladeshi Companies. International Companies. International Journal Journal of Engineering, Business and Enterprise Applications,, Applications,, 158164. In her descriptive research she emphasizes emphasiz es on capital budgeting practices of the companies in Bangladesh. From the research it is evident that NPV and IRR are the dominating methods of capital budgeting. However Payback Period (PBP) is used by many of the companies. In our study, we try to figure out the dominating methods of capital budgeting and will focus on the other methods to show the actual practice of capital budgeting in Bangladeshi companies. Mao, J. C. T. (1970), Survey of Capital Budgeting: Theory and Practice. The Journal of Finance, 25: 349 – 360. 360. This study illustrates the differences in capital budgeting theory and practice. There have been invented many applications to improvise the capital budgeting
techniques and procedures. In this paper we are very eager to show the disparity between capital budgeting theory and capital budgeting in practice. M.Jog, V., & K. Srivastava, A. (1996). Capital Budgeting Practices in Corporate Canada. Financial Management Association, 37-43. In this article it is identified that capital budgeting and the estimation of cost of capital are one of the most crucial financial decisions faced by financial managers. In this study they show variation of uses capital budgeting techniques used by Canadian corporations. Likely, in our study we show the variations of uses capital budgeting techniques by different firms in accordance to their requirement. Hall, J., & Millard, S. (2009). Capital budgeting practices used by selected lis ted South African firms. South African Journal of Economics and Management Sciences, , 85-97. This article studies the application of capital budgeting process among a sample of sample of South African industrial firms listed on the JSE securities exchange for almost 10 years. NPV is founded to be most recognized methods over IRR which is proved by the incorporation of this method by many companies. Hermes, N., Smid, P., & Yao, L. (2007). Capital Budgeting Practices: A Comparative Study of the Netherlands and China. International Business review, 630-650. This paper shows the comparison of the uses of capital budgeting techniques of Dutch and Chinese companies. For the purpose of the paper the researcher obtain data from a survey among 250 Dutch and 300 Chinese companies. The aim was to analyze the use of techniques by companies in both countries from a comparative perspective to see economic development differs in two countries. In our study we focus only to companies of a single country (Bangladesh) to see comparison of efficiency of techniques used by the firms. Brijlal, P., & Quesada, L. (2011). The Use of Capital Budgeting Techniques in Businesses: A Perspective From The Western Cape. The Journal of Applied Business Research – , 25`` (4), 37-46. In their study it is prominent that there are several techniques commonly used to evaluate capital budgeting projects. For the evaluation Payback period (PBP), Accounting Rate of Return (ARR), Present value, Internal Rate of Return (IRR), and Profitability Index are commonly used. From their study they found that Discounted PBP and IRR proved as superior over NPV. In our paper we also try to go through the basic capital budgeting techniques and find out the superior techniques that used by most of the firms.
