scholarly journals Capital budgeting practices and political risk: evidence from Lebanon

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed Bakri ◽  
Suzanne G. M. Fifield ◽  
David M. Power
Keyword(s):  
Capital Investment ◽  
Political Risk ◽  
Capital Budgeting ◽  
Capital Projects ◽  
Content Type ◽  
Corporate Managers ◽  
Investment Projects ◽  
Investment Appraisal ◽  
High Level ◽  
The Impact

Purpose This paper aims to examine how capital investment projects are appraised in Lebanon; whether the risk is incorporated into this process by Lebanese firms and the impact of political risk on the capital budgeting process. Design/methodology/approach This paper uses a questionnaire survey to investigate the capital budgeting practices of companies located in Lebanon, which is a country characterised by a high level of political risk. Findings Lebanese companies tend to use more than one method of investment appraisal and, increasingly, they are using sophisticated discounted cashflow techniques alongside the payback period. The most widely used methods to evaluate risk include scenario and sensitivity analysis. Finally, political risk plays an important role in the capital budgeting processes of Lebanese companies. Originality/value The paper reports on whether the methods of capital investment appraisal used throughout advanced Western economies are used in the context of an emerging economy. In addition, Lebanon is an ideal research site to study capital budgeting as the conflicts in the country of the past 50 years have required sizeable new expenditure on capital projects; the country is characterised by high levels of political risk which may lead corporate managers to use different approaches to investment appraisal and it provides an opportunity to study capital budgeting decisions by private, unlisted firms.

Purchasing power return, a new paradigm of capital investment appraisal

2018 ◽  
Vol 44 (2) ◽  
pp. 241-256 ◽  
Author(s):  
David DeBoeuf ◽  
Hongbok Lee ◽  
Don Johnson ◽  
Maksim Masharuev
Keyword(s):  
Capital Investment ◽  
Net Present Value ◽  
Capital Budgeting ◽  
Cash Flows ◽  
Purchasing Power ◽  
New Paradigm ◽  
Content Type ◽  
Investment Projects ◽  
Investment Appraisal ◽  
The Many

Purpose The purpose of this paper is to contribute to financial managers’ capital budgeting decision-making processes by proposing a new paradigm of capital investment appraisal. The expected return, required return structure of the proposed purchasing power return (PPR) methodology eliminates the many flaws associated with the competing internal rate of return (IRR) and modified IRR (MIRR) techniques. Design/methodology/approach The authors provide a new framework for examining long-term investment projects through a percentage return prism. Unlike that of IRR and MIRR, mathematical consistency with net present value (NPV) is a design requirement. Findings PPR eliminates the many flaws found in the IRR and MIRR methodologies, is mathematically consistent with NPV, and identifies positive-NPV investments forecasted to reduce the company’s purchasing power. These projects are acceptable under NPV, but flagged for additional review and potential rejection. Created to examine projects on a percentage return basis, PPR employs market-based inflation rates to convert all cash flows into constant purchasing power units of measure. From these units, an expected real return is estimated and compared to the project’s inflation-adjusted required return, resulting in an accept/reject decision consistent with that of NPV. Originality/value The proposed PPR is a new paradigm of capital investment appraisal that eliminates the many problems found in the IRR and MIRR techniques, is mathematically consistent with the NPV method, and helps financial decision makers examine investment projects on an expected percentage return basis. PPR also flags for further review projects expected to actually reduce the company’s purchasing power.

The impact of principal-principal conflict on financial flexibility

2016 ◽  
Vol 8 (4) ◽  
pp. 305-330 ◽  
Author(s):  
Stacey Alicia Estwick
Keyword(s):  
Capital Investment ◽  
Qualitative Methodology ◽  
Net Present Value ◽  
Capital Budgeting ◽  
Financial Flexibility ◽  
Content Type ◽  
Professional Management ◽  
Substantial Investment ◽  
And Control ◽  
The Impact

Purpose This study examined the attainment and the benefits of financial flexibility in the presence of concentrated ownership in the Caribbean. Design/methodology/approach This study used qualitative methodology via the use of case studies. Findings Results revealed that liquidity may be considered the most important form of financial flexibility for firms in transitioning economies, due to constrained capital markets. Blockholder firms also focus on liquidity out of a concern for recovering their substantial investment. This study suggested that in addition to an emphasis on liquidity, blockholder owners emphasise professionalism in managing the firm. This professionalism, accompanied by a genuine separation of ownership and control, may be critical in minimising the possibility of misappropriation of surplus liquidity. The study showed that blockholder owned firms may not recognise maximum capital investment benefits because of the use of sub-optimal capital budgeting techniques reflecting their liquidity preference, or pay maximum dividends, opting instead to use dividends as a governance tool. However, the ability to separate ownership from the management of the operations may counteract this, leading to an increased focus on net present value (NPV) maximising projects, and a dividend policy aimed at preserving future financial flexibility. Research limitations/implications This study highlights the value of qualitative studies in finance research, by providing a deeper insight into the management of firm financial flexibility, under blockholder ownership. It emphasises the importance of considering liquidity as a critical form of financial flexibility. Furthermore, the study shows that two significant factors in controlling principal–principal (PP) conflict may be the ability to separate ownership from control and the appointment of a professional management team. Originality/value This research introduces the variable of PP agency in the study of financial flexibility.

Using calculations in the early phase of strategic capital investment projects – insights from the mining industry

2018 ◽  
Vol 15 (4) ◽  
pp. 465-484 ◽  
Author(s):  
Bo Karlsson ◽  
Monika Kurkkio
Keyword(s):  
Early Phase ◽  
Capital Investment ◽  
Investment Decision ◽  
Mining Industry ◽  
Capital Budgeting ◽  
Project Managers ◽  
Content Type ◽  
Investment Projects ◽  
And Function ◽  
Practical Implications

Purpose The purpose of this paper is to identify and describe how calculations are used in the early phase of strategic capital investment projects (SCIPs) in the mining context and thereby create an understanding of what calculations do in these situations. Design/methodology/approach The authors conducted a case study based on interviews with project managers, controllers and top-level managers, as well as documents and observations. Findings The empirical evidence provides key insights into the different uses of calculations in the early phase of SCIPs in the mining industry. The authors found evidence that calculations in the early phase of SCIPs are used to generate ideas, support learning and discussions, evaluate decisions and act as a mediating device. Research limitations/implications The paper is based on a single organization, and therefore, the findings of the paper are limited to theoretical generalization. Practical implications The study has practical implications directed toward top management, controllers and project managers working with SCIPs. This study suggests that calculations in the early phase are used to unite and create a shared view in the early phase rather than to present rational answers to different investment decision. Calculations can also be used to direct attention toward important areas, sort out and prioritize among ideas, communicate a shared view and function as a template. Thus, calculations are essential in the early phase as they help to transform activities into actions. Originality/value This paper contributes to the accounting literature in which it has been emphasized that we still know little of strategic capital budgeting processes, with insights into the multiple uses of calculations in the early phase of SCIPs. We also argue that calculations act as mediating devices in the early phase of SCIPs as they provide a common frame of reference and a basis for action.

Characterizing response quantity on academic social Q&A sites: a multidiscipline comparison of linguistic characteristics of questions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lei Li ◽  
Anrunze Li ◽  
Xue Song ◽  
Xinran Li ◽  
Kun Huang ◽  
...  
Keyword(s):  
Information Needs ◽  
Function Words ◽  
Second Person ◽  
Content Type ◽  
Five Disciplines ◽  
Negative Effect ◽  
Academic Communication ◽  
High Level ◽  
The Impact ◽  
The Relationship

PurposeAs academic social Q&A networking websites become more popular, scholars are increasingly using them to meet their information needs by asking academic questions. However, compared with other types of social media, scholars are less active on these sites, resulting in a lower response quantity for some questions. This paper explores the factors that help explain how to ask questions that generate more responses and examines the impact of different disciplines on response quantity.Design/methodology/approachThe study examines 1,968 questions in five disciplines on the academic social Q&A platform ResearchGate Q&A and explores how the linguistic characteristics of these questions affect the number of responses. It uses a range of methods to statistically analyze the relationship between these linguistic characteristics and the number of responses, and conducts comparisons between disciplines.FindingsThe findings indicate that some linguistic characteristics, such as sadness, positive emotion and second-person pronouns, have a positive effect on response quantity; conversely, a high level of function words and first-person pronouns has a negative effect. However, the impacts of these linguistic characteristics vary across disciplines.Originality/valueThis study provides support for academic social Q&A platforms to assist scholars in asking richer questions that are likely to generate more answers across disciplines, thereby promoting improved academic communication among scholars.

The robot-to-robot service encounter: an examination of the impact of inter-robot warmth

2021 ◽  
Vol 35 (9) ◽  
pp. 15-27
Author(s):  
Magnus Söderlund
Keyword(s):  
Design Methodology ◽  
Service Robots ◽  
Service Robot ◽  
Service Encounters ◽  
Experimental Setting ◽  
Content Type ◽  
Robot Systems ◽  
Synthetic Agents ◽  
High Level ◽  
The Impact

Purpose This study aims to examine humans’ reactions to service robots’ display of warmth in robot-to-robot interactions – a setting in which humans’ impressions of a service robot will not only be based on what this robot does in relation to humans, but also on what it does to other robots. Design/methodology/approach Service robot display of warmth was manipulated in an experimental setting in such a way that a service robot A expressed low versus high levels of warmth in relation to another service robot B. Findings The results indicate that a high level of warmth expressed by robot A vis-à-vis robot B boosted humans’ overall evaluations of A, and that this influence was mediated by the perceived humanness and the perceived happiness of A. Originality/value Numerous studies have examined humans’ reactions when they interact with a service robot or other synthetic agents that provide service. Future service encounters, however, will comprise also multi-robot systems, which means that there will be many opportunities for humans to be exposed to robot-to-robot interactions. Yet, this setting has hitherto rarely been examined in the service literature.

scholarly journals Initiation of capital projects in industries having an operational focus: an Australian stevedoring case example

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Haya Aldaghlas ◽  
Felix Kin Peng Hui ◽  
Colin Fraser Duffield
Keyword(s):  
Project Management ◽  
Negative Impact ◽  
Container Terminal ◽  
Project Planning ◽  
Extensive Literature ◽  
Capital Projects ◽  
Content Type ◽  
Initiation Phase ◽  
Unique Nature ◽  
The Impact

PurposeThe initiation phase of capital projects is critical as this is where the highest number of options exist for modifying the project with minimal expenditure. Government and large organisations frequently involved in major capital projects have extensive procedures for this phase, yet organisations having an operational focus (like major container terminal stevedores), that only occasionally undertake capital projects face the dilemma of the trade-off between project planning and the management of operations. This research reported in this paper investigated the impact of industry operational considerations on the initiation of capital projects.Design/methodology/approachIn addition to an extensive literature review, a living research investigation of real projects initiated by a stevedoring company operating in Australia has been observed; the primary author of this paper spent six months as a participant/observer and witnessed the initiation of 12 capital projects. The collected data was qualitatively analysed using a four-step coding method.FindingsThe findings confirm that project initiation is a challenge for organisations who only spasmodically undertake capital projects and available project management frameworks do not necessarily consider the impact of such an organisation's culture. Issues identified that may have a negative impact on the initiation phase include lack of workplace trust, high individualism, ineffective interdepartmental communication, lack of resources and engineering and safety complexity.Originality/valueThe study investigated an underexplored industry within the context of project initiation, using the Australian stevedoring as a case study. This initial investigation suggests that a tailored project management framework is needed for the initiation phase of projects to reflect the unique nature of the stevedoring industry and by inference other industries that have a strong operational focus.

Impact of web banner advertising frequency on attitude

2018 ◽  
Vol 30 (2) ◽  
pp. 380-399 ◽  
Author(s):  
Rahim Hussain ◽  
Ahmed Shahriar Ferdous ◽  
Gillian Sullivan Mort
Keyword(s):  
Online Advertising ◽  
Repetition Effect ◽  
Brand Attitude ◽  
Moderating Effect ◽  
Future Research ◽  
Content Type ◽  
Banner Advertisements ◽  
Banner Advertisement ◽  
High Level ◽  
The Impact

Purpose The purpose of this paper is to examine whether advertising type (static or dynamic) and appeal (emotional or rational) moderate the relationship between web banner advertising frequency and consumer attitudinal response. Design/methodology/approach A laboratory experiment involving 400 participants was conducted to test for the moderating effect. Factorial ANOVA is used to measure brand attitude. Findings The results identified that the web banner advertisement type acted as a moderator between frequency and brand attitude. However, the moderating effect of banner advertisement appeal was found to be insignificant at a single banner advertisement frequency (i.e. exposure) but significantly different at a higher frequency. The study findings provide better directives for online marketers. Practical implications The major limitation is the fact that the impact of banner advertisement frequency was manipulated from one to five exposures. Future research needs to determine what happens after the fifth exposure, perhaps ten exposures or more, to determine the wear-out effect and in turn, to decide on the optimal frequency level in an effort to design more appropriate web communication strategies. Social implications The result shows that pop-up banner advertisements are intrusive, and that high level of exposures to pop-up banner advertisement could annoy online users. Thus, online advertisers should avoid repeating the pop-up banner advertisements because this could adversely affect the attitude towards the online advertising in general, and could also negatively influence attitudes towards the brand and ultimately effect online purchase. Originality/value This study contributes to the theory by providing more insights into the repetition effect, and comprehensive conclusions can be drawn based on the manipulation of banner advertisement frequency on different frequency levels. The research identifies that if the communication objective is to generate brand attitude, different strategies can be adopted depending on the banner advertisement type (pop-up vs static) and banner advertisement appeal (emotional vs rational).

Turnaround of struggling plant of DJSL Limited: capital investment or operational improvement

2018 ◽  
Vol 8 (3) ◽  
pp. 1-26
Author(s):  
Somnath Chakrabarti ◽  
Nripendra Kumar ◽  
Anupam Upadhyay
Keyword(s):  
Operations Management ◽  
Capital Investment ◽  
Swot Analysis ◽  
Subject Area ◽  
Content Type ◽  
Turnaround Strategies ◽  
People Development ◽  
Operational Issues ◽  
Functional Experience ◽  
The Impact

Subject area Strategy. Study level/applicability The case can primarily be used for a Strategic Management course for teaching the revival strategies for financially weak plants. The case highlights the need to shift from a product manufacturing perspective to a market orientation perspective and, hence, may add value as an add-on case in a Strategic Marketing course. The case also covers the topic of benchmarking which may be of use in an Operations Management course. Case overview DJSL Ltd. is the largest engineering and manufacturing enterprise in India in the energy-related/infrastructure space in the public sector. Its Lucknow unit, manufacturing porcelain insulators and wear resistant ceramic lining (CERA LINING), has started reporting losses. A change of management took place in October 2015, whereby Mr. S P Singh was appointed as the Head of the Lucknow Unit. Mr. Singh had rich functional experience of 30 years, mainly in the domains of strategy, project execution and commercial aspects. He was asked to come up with a revival plan for the Unit by the top management of DJSL. The case highlights the importance of operational issues in turnaround management. Expected learning outcomes Students may be encouraged to debate the benchmarking practices that are best suited for the Lucknow unit. They can also discuss the impact of benchmarking efforts upon turnaround strategy. Students are also encouraged to understand the constraints which may limit the success of initiatives impacting operational improvements. Students need to develop the understanding of marketing strategy to perform a SWOT analysis of each product of the Lucknow unit and to sense the business opportunities in and around the environment. Students need to discuss how productivity may be improved with the adoption of appropriate people development strategies. Students are encouraged to discuss the revival/turnaround strategies and to identify the influence of improvement in operational efficiency/productivity upon revival plan. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS: 11: Strategy.

An exploratory study of team conflict in the capital investment decision-making process

2018 ◽  
Vol 11 (4) ◽  
pp. 960-985
Author(s):  
Frank Lefley
Keyword(s):  
Decision Making ◽  
Team Performance ◽  
Exploratory Study ◽  
Capital Investment ◽  
Small Sample ◽  
Sample Number ◽  
Content Type ◽  
Team Conflict ◽  
Investment Appraisal ◽  
Personal Conflict

PurposeThe purpose of this paper is to explore the current management perceptions regarding conflict within teams, specifically looking at capital investment appraisals, with the aim of improving team performance.Design/methodology/approachThe research was undertaken in two stages. The first stage is based on a postal questionnaire survey relating to the appraisal of capital investments, addressed to large UK organisations. The second stage was conducted through semi-structured interviews, which were followed by a short-questionnaire sent out by e-mail, and designed from the information obtained from the interviews. The research is both qualitative and quantitative.FindingsFrom the exploratory study, the author was able to identify and further investigate what the author’s respondents termed “personal” and “departmental” conflicts, as well as what the author perceived to be “good” (positive) conflict and “bad” (negative) conflict. The author finds that controlled “departmental” conflict may lead to enhanced decision making, while “personal” conflict may be destructive and lead to non-optimal decision making. The author also identified the importance of the investment appraisal “procedure” as distinct from the individual models used, and suggests that this is one way of controlling conflict within teams.Research limitations/implicationsThe research is limited by the fact that it is based on individual perceptions of a small sample number. However, the sample consists of some of the most senior executives from the largest UK organisations whose views are usually difficult to obtain by academics.Practical implicationsIt provides senior managers with a comprehensive view, by their peers, and a better understanding of team conflict, especially with regard to “personal” and “departmental” conflicts; thus, allowing them to manage teams more efficiently in the future.Originality/valueThe research is unique in that it focusses on conflict within teams that are given the specific task of appraising capital projects and it theorises on what the respondents’ terms “departmental” and “personal” conflict. It brings up-to-date, managements’ current perception of team conflict and contributes to the ongoing search for a better understanding of conflict within business teams, and ultimately to an enhanced team performance and improved decision making.

A survey of capital budgeting practices used by firms in Barbados

2018 ◽  
Vol 16 (4) ◽  
pp. 564-584
Author(s):  
Philmore Alleyne ◽  
Shantelle Armstrong ◽  
Marissa Chandler
Keyword(s):  
Net Present Value ◽  
Cultural Practices ◽  
Contingency Theory ◽  
Capital Budgeting ◽  
The Body ◽  
Capital Projects ◽  
Content Type ◽  
The Individual ◽  
Self Administered Questionnaire

PurposeThis paper aims to examine the capital budgeting practices used by firms in Barbados using contingency theory.Design/methodology/approachThe study involves the use of a self-administered questionnaire sent to the individual responsible for capital budgeting decisions (either the accountant, financial controller or senior manager) in each of the firms selected. In total, 41 completed questionnaires are received; 12 follow-up interviews are conducted with respondents to indicate the reasons for use and non-use of capital budgeting practices.FindingsCapital budgeting practices are not widely used by firms in Barbados. The payback method (PBM) is determined to be the preferred method of choice because of its simplicity, agility and cultural practices. Based on contingency theory, organisations in Barbados believe that the PBM is a better fit for them. Top management drives the capital budgeting process with crude and non-traditional methods for the acceptance of capital projects. While there are no statistically significant differences in the capital budgeting practices used in different sectors, professional accountants are more likely to use net present value and sensitivity analysis than non-professional accountants.Research limitations/implicationsThe sample is small, and consequently, findings may not be generalisable to the population.Originality/valueThis study makes a significant contribution to the body of literature in emerging countries such as Barbados on the usage of capital budgeting practices and factors that may influence their usage. It further contributes to policymakers, practitioners, organisations and stakeholders of organisations.

Sign in / Sign up

Export Citation Format

Share Document