DETERMINANTS OF CAPITAL BUDGETING METHODS USE
Keywords:
Capital Budgeting, Capital Expenditure Budget, Management Accounting, Investment Decisions, ThailandAbstract
The research focuses on the investigation of determinants of the choice of capital budgeting methods (CBM) applied by companies in Thailand. Samples of the study are the companies listed in the Stock Exchange of Thailand. Combining the data on CBM use with a rich set of dependent variables enabled identification of influence of certain company characteristics, chief financial officer’s (CFO) characteristics and project magnitude of capital expenditure budget (CAPEX) on the use of CBM. We found that in the case of investment appraisal methods, net present value (NPV) was used (often or always) by 33.6% of Thai companies whereas IRR was used (often or always) by 36.3% of Thai companies. Analysis of the company’s characteristics shows that foreign ownership, management ownership, the size of the company, foreign sales and leverage levels influence the use of CBM with a statistical significance. The result of the study also reveals that public ownership influences the use of capital budgeting methods.
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