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| Author: | Chen, S. Clark, R. L. |
| Title: | Management compensation and payback method in capital budgeting: a path analysis. |
| Journal: | Accounting and Business Research
1994 : SPRING, VOL. 24:94, p. 121-132 |
| Index terms: | CAPITAL BUDGETING DISCOUNTED CASH FLOW MANAGEMENT |
| Language: | eng |
| Abstract: | While discounted cash flow techniques, such as net present value, are the primary normative models of capital budgeting recommended by finance theory, the survey suggests that one of the so-called "naive methods", the payback (PB) criterion, is widely used in practice. About 85 % of the responding firms make some use of the payback criterion. Almost 50 % of the responding firms indicate that the payback method plays a relatively important role in capital budgeting decisions, and the degree of the importance varies among firms. |
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