We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Cost of Capital Techniques Used by Chinese Firms: A Survey of Practice.
- Authors
TROMBLEY, TIMOTHY E.; HADDAD, KAMAL M.
- Abstract
This paper presents the results of a survey of how Chinese firms compute the cost of capital and how they utilize the cost of capital in their decision making. We compare and contrast our 2015 Chinese responses to the results from a survey of U.S. firms conducted by Gitman and Vandenberg (2000). We report several surprising findings. For example, Chinese firms are closer to their target capital structure than U.S. firms, are more likely to include short-term financing in their cost of capital calculations, are more likely to rely on numbers and less likely to rely on managerial reputation when evaluating a project, and sometimes utilize financial methods with which top managers are unfamiliar. Chinese firms more frequently update their cost of capital and reevaluate ongoing projects than U.S. firms do. This paper contributes to understanding the differences between U.S. and Chinese financial management practices.
- Subjects
CHINA; CAPITAL costs; BUSINESS enterprises; DECISION making in business; CAPITAL structure; FINANCIAL management
- Publication
Quarterly Journal of Finance & Accounting, 2018, Vol 56, Issue 1/2, p29
- ISSN
1939-8123
- Publication type
Article