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The Theory and Practice of Corporate Finance: Evidence from the Field

2000; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.220251

1556-5068

John R. Graham, Campbell R. Harvey,

Auditing, Earnings Management, Governance

We survey 392 CFOs about the cost of capital, capital budgeting, and capital structure. Large firms rely heavily on net present value techniques and the capital asset pricing model, while small firms are relatively likely to use the payback criterion. Older executives without an MBA are more likely to rely on payback than are younger executives with an MBA. Surprisingly, most companies use a single company-wide discount rate to evaluate a project in a new industry and country.