Abstract
Traditional capital budgeting or investment appraisal practices have not developed enough to cope with the constantly changing modern economy which significantly uses information technology (IT) (Schniederjans et al. 2004) and capital market and organisational interactions. Traditionally, capital budgeting uses a one-off objective in the form of net present value (NPV) to evaluate long-term capital projects. The existing economic conditions, on which decisions are based, do not remain constant for the life of the capital investment, therefore organisations undertake rigorous risk management appraisal before deciding to go ahead with the projects. However, this is not sufficiently adequate and there is a need to develop a new capital budgeting model which factors in not only risk (Levary and Seitz 1990), but also multiple objectives, interdisciplinary impacts on investment appraisal decisions (Khan 2008), and agency costs (Elali and Trainor 2009). Effective capital budgeting decisions should consider corporate governance principles, the regulatory environment, capital markets and organisational interactions, and accounting practices and methods. In the modern economy, it is necessary to develop a new capital budgeting model which incorporates all these economic interdisciplinary interactions mentioned above. This study integrates the principles of corporate governance, risk and uncertainty, and capital budgeting principles in financial management in the e-commerce and airline industries based on capital market research in accounting. In this study, the impact of the integration of the above disciplines on investment appraisal decisions is analysed.
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- 1.
Capital market research in accounting deals with contemporary issues of financial reporting, in particular, the interrelationship between accounting practices, disclosure policies, earning management, outside stakeholders and capital markets.
- 2.
This valuation method assumes that companies in similar industries perform comparably in terms of cash flows, operating profit and loss, and financial position.
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Kalyebara, B., Islam, S.M.N. (2014). Introduction. In: Corporate Governance, Capital Markets, and Capital Budgeting. Contributions to Management Science. Physica, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-35907-1_1
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