One of the debates in the capital budgeting model selection is between the free cash flow and DCF methods. In this paper an attempt is made to compare SVA against NPV model based on Monte Carlo simulations. Accordingly, NPV is found less sensitive to value driver variations and has got higher...

According to recent surveys, most companies use discounted-cash-flow (DCF) methods to evaluate capital budgeting decisions. DCF methods typically assume that a project's initial cash outlay (ICO) is known with certainty. However, many types of initial outlays have substantial uncertainty,...

Management accountants who are preparing cash flow forecasts for capital budgeting decisions may have preferred conclusions that lead to motivated reasoning. Whereas previous research has mainly demonstrated antecedents of accountants’ motivated reasoning (e.g., client pressure), we look more...

This paper proposes a method for evaluating a project under certainty by means of a systemic outlook, which borrows from accounting the way of representing economic facts while replacing accounting values with cash values. The investor's net worth is regarded as a system whose structure changes...

Using an NPV-based revealed-preference strategy, I find that idiosyncratic risk materially affects the discount rate that firms use in their capital budgeting decisions. I exploit quasi-exogenous within-region variation in project-specific idiosyncratic risk and find that, on average, firms...

This paper studies how division managers' access to venture capital (VC) markets affects the internal capital allocation decision of a multi-division firm. Division managers may leave firms and seek venture financing if their project ideas are not funded by headquarters. A successful new venture...