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, 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 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 survey results
from executives of companies I ten countries in Central and Eastern Europe (CEE) Bulgaria,
Croatia, Csech Republic, Hungary, Lativa, Lithunia, Poland, Romania, Slovak Republic, and
Slovenia regarding their capital 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), 225-247. In this article the
authors tries to evaluate current techniques in capital budget decision 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 Journal of Engineering, Business and Enterprise Applications,, 158-
164. In her descriptive research she emphasizes 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: 349360. 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 listed 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.