dc.description.abstract |
Allocating resources among competing investment projects is one of the most critical decisions
made by the top management and is of strategic importance, and it invariably involve large
sums of money and have a long-term economic life cycle. These decisions are critical to
managing strategic change and sustaining long term corporate performance. Current
investment markets are evolving within an increasingly volatile and intertwined global network
and investments are strongly exposed to uncertainties .Uncertainties could lead to failure of a
good investment decision and thus integration of uncertainty with capital budgeting techniques
is overarching, nonetheless, often complex . Over the last two decades, corporate practices
regarding capital budgeting have not been static and have diverged from theories. Therefore,
aim of this study was to identify the factors indicating uncertainty in capital budgeting decision
making which focused on Sri Lankan listed companies .The data for this study were garnered
from 186 CFOs working in companies listed on the Colombo Stock Exchange using selfadministered
questionnaires. The questionnaire was piloted with a sample of five CFOs. After
the data were collected, they were analysed using multivariate analysis such as factor analysis
and confirmatory factor analysis. This study identified four major types of specific uncertainty
factors: market uncertainty (uncertainties on competitive, output market and input market),
social uncertainty (uncertainties on policy, political and social), operational uncertainty
(uncertainties on input, labour and production) and financial uncertainty (uncertainties on
interest rate, inflation rate and exchange rates). Overall, this study has made parametric
contributions as identified four uncertainty factors ,beyond its valuable contribution, this study
serves as a springboard for future research. |
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