An Empirical Analysis on Capital Budgeting Models, Uncertainty Tools, Cost of Capital and Firm Performance: A Comparison between Australia and Sri Lanka

Pratheepkanth Puwanenthiren, Velnampy Thirunavukarasu, Balaputhiran Sathasivam


Purpose: This paper explores how environmental differences in developed and emerging economies affect capital budgeting techniques (CBT) choices and, as a result, influence firm performance.

Design: A quantitative-descriptive literature-review analysis provides this two-nation study with an understanding of the underlying forces and issues; which were used to shape the design and content of the questionnaire; which were sent to 300 stock-exchange-listed firms (150 in Australia and 150 in Sri Lanka). Secondary data for 2013-17 are acquired from the ASX, CSE’s websites and are used to compute return on assets, return on equity, Tobin Q, and earnings per share for the sampled firms.

Findings: Australian firms tend to rely heavily on sophisticated CBTs, relatively small Sri Lankan firms prefer simple analysis techniques, but larger Sri Lankan firms tend to be as adept at sophisticated CBT analysis as Australian firms. Further, while Australian firms have a positive association between their performance and their use of more sophisticated CBTs (Tobin’s Q, excepted), Sri Lankan firms tend to experience a negative association between their performance and their use of more sophisticated CBTs (EPS, excepted).

Original: The study adds to the general knowledge on CB practices by showing that the nature of the firm appears to swamp the nurture of the environment in which it is embedded.


Keywords: Capital budgeting practices; firm performance; developed market; emerging market.




Título: "Uma análise empírica sobre modelos de orçamento de capital, ferramentas de incerteza, custo de capital e desempenho da empresa: uma comparação entre a Austrália e o Sri Lanka"


Objetivo: Este artigo explora como as diferenças ambientais nas economias desenvolvidas e emergentes afetam as escolhas das técnicas de orçamento de capital (TCC) e, como resultado, influenciam o desempenho da empresa.

Desenho/metodologia/abordagem: Uma análise quantitativa-descritiva da revisão de literatura fornece a este estudo de duas nações uma compreensão das forças e questões subjacentes; que foram usados para moldar o design e o conteúdo do questionário; que foram enviadas para 300 empresas listadas na bolsa de valores (150 na Austrália e 150 no Sri Lanka). Os dados secundários de 2013-17 são adquiridos nos sites da ASX, da CSE e são usados para calcular o retorno sobre ativos, retorno sobre patrimônio, Tobin Q e lucro por ação para as empresas incluídas na amostra.

Resultados: As empresas australianas tendem a confiar fortemente em TCCs sofisticadas, as empresas relativamente pequenas do Sri Lanka preferem técnicas de análise simples, mas as grandes empresas do Sri Lanka tendem a ser tão hábeis em análises sofisticadas de TCC quanto as empresas australianas. Além disso, embora as empresas australianas tenham uma associação positiva entre seu desempenho e o uso de TCCs mais sofisticadas (Q de Tobin, exceto), as empresas do Sri Lanka tendem a experimentar uma associação negativa entre seu desempenho e o uso de TCCs mais sofisticadas (EPS, exceto).

Originalidade o estudo aumenta o conhecimento geral sobre as práticas de CB, mostrando que a natureza da empresa parece inundar a criação do ambiente em que está inserida.


Palavras-chave: práticas de orçamento de capital; desempenho da empresa; mercado desenvolvido; mercado emergente.



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