Capital budgeting practices: A comparative study of the Netherlands and China

Niels Hermes (), Peter Smid and Lu Yao

International Business Review, 2007, vol. 16, issue 5, 630-654

Abstract: This paper compares the use of capital budgeting techniques of Dutch and Chinese firms, using data obtained from a survey among 250 Dutch and 300 Chinese companies. Our main aim is to analyse the use of capital budgeting techniques by companies in both countries from a comparative perspective to see whether economic development matters. The empirical analysis provides evidence that Dutch Chief Financial Officers (CFOs) on average use more sophisticated capital budgeting techniques than Chinese CFOs do. At the same, however, our results suggest that the difference between Dutch and Chinese firms is smaller than might have been expected based upon the differences in the level of economic development between both countries, at least with respect to the use of methods of estimating the cost of capital and the use of CAPM as the method of estimating the cost of equity.

Keywords: Capital; budgeting; Cost; of; capital; Survey; The; Netherlands; China (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0969593107000765
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Capital Budgetting Practices: A comparative Study of the Netherlands and China (2006)
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:iburev:v:16:y:2007:i:5:p:630-654

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/133/bibliographic
http://www.elsevier. ... me/133/bibliographic

Access Statistics for this article

International Business Review is currently edited by P. Ghauri

More articles in International Business Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().