Open Access Article

Title: Capital Budgeting Practices of the Fortune 1000: How Have Things Changed?

Authors: Patricia A. Ryan; Glenn P. Ryan

Addresses: Author address listing can be found in the "About the Authors" section at the end of the article.

Abstract: Capital budgeting is one of the most important decisions that face the financial manager. Prior studies spanning the past four decades show financial managers prefer methods such as internal rate of return or non-discounted payback models over net present value, the model academics consider superior. This interesting anomaly has long been a puzzle to the academic community. A recent survey of the Fortune 1000 Chief Financial Officers finds net present value to be the most preferred tool over internal rate of return and all other capital budgeting tools. While most financial managers utilize multiple tools in the capital budgeting process, these results better reflect the alignment of the academic and business view.

Keywords: Capital budgeting; Fortune 1000; financial managers; net present value; financial tools; internal rate of return.

DOI: 10.1504/JBM.2002.141091

Journal of Business and Management, 2002 Vol.8 No.4, pp.355 - 364

Published online: 05 Sep 2024 *

 

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