Corporate Practices on Capital Investment Decision Analysis: Their Contribution to Maximizing Company's Value
Abstract
This study aimed to examine the practices on capital investment decision analysis and sought to determine whether capital investment decision analysis as a company practice has contributed to the improvement of shareholder’s value of selected corporations in Region 12. Frequency and percentages were used to analyze data on profile. Mean and standard deviation were used in the analysis of the extent of companies’ practice on capital investment decision analysis and on the variables affecting capital investment decision making of companies and the contribution of the practices to company’s sales, net profit, and shareholder’s dividend. ANOVA and Pearson r were used in analyzing significant difference in the practice among industries and the significant association in the practice and companies’ years in corporation. Corporations in Region 12 practiced capital investment decision analysis/capital budgeting. Some companies followed the models specified in accounting text and some did not follow the models suggested by authorities but formulated their own processes. Companies ensured that proposals that were selected met the standards. In evaluating the investment the proposals, they relied more on and based their decision on qualitative factors. Although there were industries that were not benefited much by the practice on capital investment decision analysis, results show that on the average the practice had positive influence on company’s sales and profit and on the dividend received by the shareholders indicating enhanced company value. Corporate capital investment decision analysis or capital budgeting along the processes of generation of investment opportunities, project analysis and approval, implementation, monitoring and controlling, and post-implementation audit should be done and implemented by corporations for it can improve the company’s value.
Keywords:
Capital budgeting, capital investment decision analysis, capital investment practices
References
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Raiborn, C., Kinney, M., & Prather-Kinsey, J. (2006). Cost accounting (6th ed.). Singapore: Thomson South-Western
Needles, B., Powers, M., Mills, S., & Anderson, H. (1999). Managerial accounting. Boston New York: Houghton Mifflin Company.
Rachlin, R., & Sweeny, A. (1993). Handbook of budgeting. (3rd ed). New York: John Wiley and Sons.
Raiborn, C., Kinney, M., & Prather-Kinsey, J. (2006). Cost accounting (6th ed.). Singapore: Thomson South-Western.
Brever, P., Garrison, R., Noreen, E. (2005). Introduction to managerial accounting. McGraw-Hill. Irivin.
Cabrera, M.E. (2000). Management accounting. Manila: GIC Enterprises & Co. Inc.
Crosson, S., V., Belverd E., Needles, Jr., & Belverd E. (2008). Powers Marian principles of accounting. Houghton Mifflin Boston.
Dayananda, R., Harrison, S., Herbohn, J., & Rowland, P. (2002). Capital budgeting: Financial appraisal of investment projects. Cambridge University Press.
Garrison, R. (1979). Management accounting, concepts for planning, control, decision-making. Dallas, Texas: Business Publication, Inc.
Gitman, L. (2000). Principles of managerial finance. Addison-Wesley Longman, Inc.
Horngren, C., Datar, S., & Foster, G. (2006). Cost accounting concepts and practices. (12th ed.). Singapore: Pearson Prentice Hall.
Jain, PK., & Yadav, S. (2005). Financial management practices: A study of public sector enterprises in India. Hindustan Publishing Corporation, New Delhi. 191–209.
Needles, B., Powers, M., Mills, S., & Anderson, H. (1999). Managerial accounting. Boston New York: Houghton Mifflin Company.
Rachlin, R., & Sweeny, A. (1993). Handbook of budgeting. (3rd ed). New York: John Wiley and Sons.
Raiborn, C., Kinney, M., & Prather-Kinsey, J. (2006). Cost accounting (6th ed.). Singapore: Thomson South-Western
Needles, B., Powers, M., Mills, S., & Anderson, H. (1999). Managerial accounting. Boston New York: Houghton Mifflin Company.
Rachlin, R., & Sweeny, A. (1993). Handbook of budgeting. (3rd ed). New York: John Wiley and Sons.
Raiborn, C., Kinney, M., & Prather-Kinsey, J. (2006). Cost accounting (6th ed.). Singapore: Thomson South-Western.
Published
2018-12-27
Section
Articles
Copyright (c) 2018 Asia Pacific Journal of Social and Behavioral Sciences
Copyright holder is the Bukidnon State University.
