Capital Budgeting Decisions and the Firm’s Size
International Journal of Economic Behavior and Organization
Volume 4, Issue 6, December 2016, Pages: 45-52
Received: Dec. 24, 2016; Accepted: Jan. 6, 2017; Published: Feb. 9, 2017
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Author
Divya Gupta, Department of Finance, Institute of Management & Information Science, Vivekanand Marg, Bhubaneswar, India
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Abstract
This paper is an exploratory research on the application of capital budgeting techniques in Indian companies. This paper tries to explore the relationship between capital budgeting decisions and the firm’s size. Firm’s size has been defined as asset size, project size and turnover of the firm. This paper is based on the primary data. OLS (Observed least square Model) is used to evaluate the degree of relationship between asset size, project size and turnover of the firm with the frequency of capital budgeting techniques (FOT) and type of capital budgeting techniques (TOT) used by the companies. Using a sample size of 75 companies, the result shows that there is a positive relationship between frequency of capital budgeting techniques and application of discounted cash flow techniques with the firm’s asset size, project size and turnover of the firm. Our paper provides new insights about the frequency of the capital budgeting techniques used in the firms along with the type of technique used by the companies.
Keywords
Capital Budgeting, Asset Size, Project Size, Turnover of the Firm, Regression Analysis
To cite this article
Divya Gupta, Capital Budgeting Decisions and the Firm’s Size, International Journal of Economic Behavior and Organization. Vol. 4, No. 6, 2016, pp. 45-52. doi: 10.11648/j.ijebo.20160406.11
Copyright
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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