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Essay / Research Paper Abstract
This 3 page paper is a summary of the article “The theory and practice of corporate finance: Evidence from the field” by Graham and Harvey, which looks at the way firms assess capital budgeting issues. The bibliography cites 1 source.
Page Count:
3 pages (~225 words per page)
File: TS14_TECAPMNPV.rtf
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Unformatted sample text from the term paper:
"The theory and practice of corporate finance: Evidence from the field" looks at the aspects of coital budgeting building on former research with the aim of examining the way
in which capital budgeting in terms of the tools that were used by large firms. While the article builds on research undertaken by other it also differs in a
number of ways. The survey was large, more than 4,400 firms form a large cross section of industry was surveyed, a total of 392 chief financial officers responded. This is
the largest survey of its type, the next largest was one undertaken by Moore and Reichert in 1983 with 298 firms. The survey which was sent out by fax and
a further 500 by mail to the Fortune 500 companies (with a cross over of 391). The responses that were received was also investigated to assess any potential bias in
terms of the non responses. The subject of the survey was also very board, with over 100 questions numerous aspects were explored including issues such as the priority given
to financial flexibility and where real option values will impact on the way capital budgeting decision were made. The last different aspect of this research was to look at
whiter there were responses that were conditional on the firms circumstances, looking at issues such as the credit rating, the P/E ratio, the size of the firm, dividend policies and
even personal management details such as management ownership and the age, education and tenure of the CEO. The survey found that the most popular model used either all or
most of the time was internal rate of return followed closely by net present value, which were both used by over 70% of respondents. This was a large increase compared
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