Role of Capital Budgeting Techniques for Investment Decision Making: An Empirical Study of Public and Private Sector Companies in Pakistan

Nisar Ahmad, Sheikh Khurram Abid and Samia Maqbool

Journal of Accounting and Finance in Emerging Economies, 2021, vol. 7, issue 3, 813-822

Abstract: Purpose: Regardless matter whether it is a commercial or public enterprise, every business would have a capital budgeting procedure in residence. The supply of Public goods is the major force on Public sector institutions, and one means to do this is complete the execution of huge progress schemes. With the current state of affairs in Pakistan, major cost and time overruns have occurred on Public sector setup ventures. One of the most likely reasons of cost overruns is a lack of or insufficient cost and benefit ventures, as well as general venture management since the documentation period through the stage after installation period. This study used capital budgeting decision-making methodologies to assess Pakistan's present technological ambitions. Design/Methodology/Approach: In Pakistan, one of the top corporations did a postal survey and a cross-sectional data analysis. Although empirical data suggests a shift toward genuine conceptions and discounted cash flow (DCF) approaches, corporations still fall short of the fundamental needs. Most methodologies are used, including inner proportion of return, net present value (NPV) and payback method (PBM).Findings: The majority of corporations calculate risk adjusted cash flow, but only a small fraction of firms/businesses use the most modern risk assessment tools.Implications/Originality/Value: In comparison to other industrialized nations, the utilization of the discounted cash flow (DCF) ratio is still quite low.

Keywords: Discounted cash flow; Budgeting practices; Investment decision making; Capital budgeting (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:src:jafeec:v:7:y:2021:i:3:p:813-822

DOI: 10.26710/jafee.v7i3.1635

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