The theory-practice gap of project appraisals

This paper is intended to examine the capital budgeting practices of listed companies in Malaysia. A comparison is made between the Main Board and Second Board companies with respect to the techniques used in evaluating major capital investment projects. In achieving the intended purpose, 356 questi...

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Main Authors:	Nur Adiana Hiau Abdullah, Sabariah Norin
Format:	Article
Language:	English
Published:	Penerbit Universiti Kebangsaan Malaysia 2008
Online Access:	http://journalarticle.ukm.my/8081/ http://journalarticle.ukm.my/8081/ http://journalarticle.ukm.my/8081/1/849-1621-1-SM.pdf

id	ukm-8081
recordtype	eprints
spelling	ukm-80812016-12-14T06:46:08Z http://journalarticle.ukm.my/8081/ The theory-practice gap of project appraisals Nur Adiana Hiau Abdullah, Sabariah Norin, This paper is intended to examine the capital budgeting practices of listed companies in Malaysia. A comparison is made between the Main Board and Second Board companies with respect to the techniques used in evaluating major capital investment projects. In achieving the intended purpose, 356 questionnaires were sent to companies listed on the Main Board and 254 to the Second Board of nine industrial sectors of Bursa Malaysia. Descriptive and inferential statistics were used to analyze the data. The results of the study indicate prevalent use of the payback and the accounting rate of return (ARR) techniques in evaluating major capital investment projects. This is followed by the net present value (NPV) and the internal rate of return (IRR) methods. Large and small companies in an emerging market such as Malaysia prefer a simpler and less sophisticated technique in the assessment of major investment projects. This is inconsistent to the proposition that the theory-practice gap has narrowed in recent years. As for the non financial criteria 22.9% of the Main Board companies used such evaluation in their project assessments. This is not observed in the Second Board companies which are considered to be smaller than the Main Board companies. With respect to the usage frequency of the financial analysis techniques, the more complicated the technique, such as the IRR, the higher are the percentages of the smaller companies not using or rarely used the method. Penerbit Universiti Kebangsaan Malaysia 2008 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/8081/1/849-1621-1-SM.pdf Nur Adiana Hiau Abdullah, and Sabariah Norin, (2008) The theory-practice gap of project appraisals. Jurnal Pengurusan, 27 . pp. 85-104. ISSN 0127-2713 http://ejournal.ukm.my/pengurusan/issue/view/209
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
language	English
description	This paper is intended to examine the capital budgeting practices of listed companies in Malaysia. A comparison is made between the Main Board and Second Board companies with respect to the techniques used in evaluating major capital investment projects. In achieving the intended purpose, 356 questionnaires were sent to companies listed on the Main Board and 254 to the Second Board of nine industrial sectors of Bursa Malaysia. Descriptive and inferential statistics were used to analyze the data. The results of the study indicate prevalent use of the payback and the accounting rate of return (ARR) techniques in evaluating major capital investment projects. This is followed by the net present value (NPV) and the internal rate of return (IRR) methods. Large and small companies in an emerging market such as Malaysia prefer a simpler and less sophisticated technique in the assessment of major investment projects. This is inconsistent to the proposition that the theory-practice gap has narrowed in recent years. As for the non financial criteria 22.9% of the Main Board companies used such evaluation in their project assessments. This is not observed in the Second Board companies which are considered to be smaller than the Main Board companies. With respect to the usage frequency of the financial analysis techniques, the more complicated the technique, such as the IRR, the higher are the percentages of the smaller companies not using or rarely used the method.
format	Article
author	Nur Adiana Hiau Abdullah, Sabariah Norin,
spellingShingle	Nur Adiana Hiau Abdullah, Sabariah Norin, The theory-practice gap of project appraisals
author_facet	Nur Adiana Hiau Abdullah, Sabariah Norin,
author_sort	Nur Adiana Hiau Abdullah,
title	The theory-practice gap of project appraisals
title_short	The theory-practice gap of project appraisals
title_full	The theory-practice gap of project appraisals
title_fullStr	The theory-practice gap of project appraisals
title_full_unstemmed	The theory-practice gap of project appraisals
title_sort	theory-practice gap of project appraisals
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2008
url	http://journalarticle.ukm.my/8081/ http://journalarticle.ukm.my/8081/ http://journalarticle.ukm.my/8081/1/849-1621-1-SM.pdf
first_indexed	2023-09-18T19:51:28Z
last_indexed	2023-09-18T19:51:28Z
_version_	1777406248243691520

The theory-practice gap of project appraisals

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