Abstract
The main purpose of the current research was to examine the practices of Capital
Budgeting Techniques (CBT) in the corporate sector of Pakistan, and to identify the
factors that affect CBT’s selection during the capital budgeting decision process in
Pakistan. In developing countries, researchers have not shown much interest in this
regard. Under the Positivist philosophical approach, this study has adopted the
quantitative survey method of research. Data was collected through convenient sampling
from 173 CFOs/Finance Directors. For analysis, ordinal logistic and binary logistic
regression was used. This study found that Pakistan’s corporate sector practices are
different in some respects from the developed economies. Surprisingly, in Pakistan, in the
corporate sector, the traditional Payback Period (PP) is still a dominant CBT, rather
than the Net Present Value (NPV) and Internal Rate of Return (IRR). However, NPV is
more popular than IRR. Publically listed, and large firms pay more attention to
sophisticated CBTs than private and small firms. A positive discovery was that publicly
listed firms have started incorporating Real Option (RO) and Sensitivity Analysis (SA) in
their practice. Project duration and project size has a significant relationship in the
selection of sophisticated CBTs
Muhammad Tariq, Sajid Rahman Khattak. (2019) Practices of Capital Budgeting Techniques: Evidence from the Corporate Sector of Pakistan, NUML International Journal of Business & Management, Volume 14, Issue 1.
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