Abstract:
This study examines the capital investment decision making under
uncertainty since the application of investment appraisal practices trends
towards increasing greater superiority with the performing of multiple
tools and procedures in the current investment markets which are evolving
within an increasingly volatile and intertwined with global network,
investments are strongly exposed to uncertainties. Therefore, this study
focused on investment decision making under uncertainty of emerging
market economy of 186 Sri Lankan companies. A comprehensive primary
survey was conducted to collect data and exploratory factor analysis had
been performed to identify the uncertainty factors. The hierarchical multiple
regression analysis was performed to investigate the impact of uncertainty on
the application of capital budgeting practices in investment decision making.
The results of the study revealed that an increase in financial uncertainty was
associated with the application of net present value (NPV) based advanced
capital budgeting and sophisticated capital budgeting practices and the
size of the company was also related to the application of NPV based and
sophisticated capital budgeting practices.
