The process of investment appraisal: the experience of 10 large British and Dutch companies

The study examines the capital budgeting practices of the top 10 British and Dutch companies. The research is focused on how these companies perform investment appraisal, subsequent follow-up and measurement of project success or failure. The findings indicate that most companies follow decentralized project decision-making. Moreover, there is a strong tendency to combine the discounted cash flow (DCF) models with the newly emerged value management tools and modified versions of DCF models. However, firms do not apply uniform appraisal techniques throughout the project life cycle. Companies show less emphasis on project risk, and emphasize on financial measures in project success or failure designation. JEL Classification: G30; G31; L6; L8; L9; M10; O22; O32

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