A stock market-driven reformulation of multinational capital budgeting

John C. Edmunds and David M. Ellis

European Management Journal, 1999, vol. 17, issue 3, 310-317

Abstract: A method for ranking cross-border capital investment projects is proposed which makes direct use of stock-market valuation standards. The contribution of each proposed project is ranked according to how much the project would add to stock-market valuation of the parent company. The host country stock-market multiple is used when the proposed investment project will be in a subsidiary located in that host country. Three projects are ranked using the conventional method, the adjusted present value method, and the stock-market-driven method. The rankings come out 1,2,3; 2,1,3; and 3,1,2. The intent of this paper is to cast doubt on the ranking methods that are currently in use, by showing a method that gives a different, and apparently superior, ranking.

Date: 1999
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0263237399000109
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eurman:v:17:y:1999:i:3:p:310-317

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/115/bibliographic
http://www.elsevier. ... me/115/bibliographic

Access Statistics for this article

European Management Journal is currently edited by Michael Haenlein

More articles in European Management Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().