Do managers in South Africa manufacturing firms make optimal capital investment decisions?

 

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dc.contributor.author Gilbert, E
dc.date.accessioned 2016-08-26T08:11:23Z
dc.date.available 2016-08-26T08:11:23Z
dc.date.issued 2003
dc.identifier.citation Gilbert, E. (2003). Do managers of south african manufacturing firms make optimal capital investment decisions? South African Journal of Business Management, 34(2), 11-17.
dc.identifier.uri http://hdl.handle.net/11427/21559
dc.description.abstract Managing the deployment of a firm’s assets in the form of capital goods is a vital determinant of a firm’s ability to successfully compete over time. Corporate finance theory clearly prescribes a rule to ensure the optimality of these decisions: all capital investment decisions should be evaluated through the use of the net present value (NPV) rule while project specific risk should be incorporated through the adjustment of the discount rate used in the NPV analysis. This paper presents the results of a survey of the capital investment evaluation practices of South African manufacturing firms. The results indicate that the majority of firms surveyed do not use the NPV evaluation technique when making their capital investment decisions. Furthermore, those firms that do use this technique use it in combination with other, theoretically deficient (and redundant) techniques. Finally, they do not adjust for project specific risk as prescribed.
dc.language.iso eng
dc.source South African Journal of Business Management
dc.source.uri http://www.sajbm.com/
dc.title Do managers in South Africa manufacturing firms make optimal capital investment decisions?
dc.type Journal Article en_ZA
dc.date.updated 2016-01-04T08:30:45Z
uct.type.publication Research en_ZA
uct.type.resource Article en_ZA
dc.publisher.institution University of Cape Town
dc.publisher.faculty Graduate School of Business
dc.publisher.department GSB
uct.type.filetype Research
uct.type.filetype Text
uct.type.filetype Image
dc.identifier.apacitation Gilbert, E. (2003). Do managers in South Africa manufacturing firms make optimal capital investment decisions?. <i>South African Journal of Business Management</i>, http://hdl.handle.net/11427/21559 en_ZA
dc.identifier.chicagocitation Gilbert, E "Do managers in South Africa manufacturing firms make optimal capital investment decisions?." <i>South African Journal of Business Management</i> (2003) http://hdl.handle.net/11427/21559 en_ZA
dc.identifier.vancouvercitation Gilbert E. Do managers in South Africa manufacturing firms make optimal capital investment decisions?. South African Journal of Business Management. 2003; http://hdl.handle.net/11427/21559. en_ZA
dc.identifier.ris TY - Journal Article AU - Gilbert, E AB - Managing the deployment of a firm’s assets in the form of capital goods is a vital determinant of a firm’s ability to successfully compete over time. Corporate finance theory clearly prescribes a rule to ensure the optimality of these decisions: all capital investment decisions should be evaluated through the use of the net present value (NPV) rule while project specific risk should be incorporated through the adjustment of the discount rate used in the NPV analysis. This paper presents the results of a survey of the capital investment evaluation practices of South African manufacturing firms. The results indicate that the majority of firms surveyed do not use the NPV evaluation technique when making their capital investment decisions. Furthermore, those firms that do use this technique use it in combination with other, theoretically deficient (and redundant) techniques. Finally, they do not adjust for project specific risk as prescribed. DA - 2003 DB - OpenUCT DP - University of Cape Town J1 - South African Journal of Business Management LK - https://open.uct.ac.za PB - University of Cape Town PY - 2003 T1 - Do managers in South Africa manufacturing firms make optimal capital investment decisions? TI - Do managers in South Africa manufacturing firms make optimal capital investment decisions? UR - http://hdl.handle.net/11427/21559 ER - en_ZA


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