Capital budgeting techniques employed by selected South African state-owned companies
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Date
Authors
Hall, J.H. (John Henry)
Mutshutshu, Tendani
Journal Title
Journal ISSN
Volume Title
Publisher
Virtus Interpress
Abstract
An analysis of the prior literature revealed few studies on the capital budgeting practices of state-owned companies (SOCs). The goal of this study was therefore to investigate the capital budgeting techniques employed by decision-makers in South African state-owned companies. The results indicated that the NPV and IRR techniques were used by 43% of respondents (the NPV was slightly more popular). WACC emerged as the preferred discount rate for capital budgeting purposes. In considering project risk, state-owned companies seem to prefer sensitivity analysis. It is thus recommended that academics emphasise the importance of NPV as a primary capital budgeting technique.
Description
Keywords
Net present value (NPV), Internal rate of return (IRR), Weighted average cost of capital (WACC), Capital budgeting techniques, State-owned companies (SOCs)
Sustainable Development Goals
Citation
Hall, JH & Mutshutshu, T 2013, 'Capital budgeting techniques employed by selected South African state-owned companies', Corporate Ownership and Control, vol. 10, no. 3, pp. 177-187.