Premium
THE CAPITAL BUDGETING BEHAVIOUR AND CORPORATE CHARACTERISTICS OF CAPITAL‐CONSTRAINED FIRMS
Author(s) -
Pike Richard H.
Publication year - 1983
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.1983.tb00459.x
Subject(s) - capital budgeting , profitability index , capital (architecture) , cost of capital , business , sample (material) , economic capital , capital expenditure , risk adjusted return on capital , capital structure , finance , investment (military) , financial capital , monetary economics , economics , capital formation , microeconomics , debt , profit (economics) , chemistry , archaeology , chromatography , politics , political science , law , history
This paper addresses (1) the nature and pervasiveness of organisational constraints, frnancial and otherwise, on investment, and (2) the corporate characteristics and capital budgeting behaviour of capital‐constrained firms for a sample of 126 UK companies. The results indicate that corporate size, risk and profitability are important corporate characteristics in this regard, and that financially‐constrained firms tend to adopt naive capital budgeting methods in resolving the capital rationing problem.