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| Author: | Holmen, M. Pramborg, B. |
| Title: | Capital budgeting and political risk: Empirical evidence |
| Journal: | Journal of international financial management & accounting
2009 : SUMMER, VOL. 20:2, p. 105-134 |
| Index terms: | capital budgeting foreign investment country risk political risks companies Scandinavia Nordic countries Sweden |
| Language: | eng |
| Abstract: | This paper examines the use of capital budgeting techniques for foreign direct investments in Swedish firms. The use of the theoretically correct net present value method is found to decrease with the political (here as: pol.) risk in the host country and the use of the Payback method to increase with the pol. risk. It is concluded that in the presence of capital market imperfections, unsystematic and country-specific pol. risks are important. |
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