Artikel

Why Small Manufacturing Firms Shun DCF

Although there is ample literature on the use of capital budgeting techniques by small firms, there is practically no research available on why small firms don’t use discounted cash flow methods. This paper looks at this rationale issue in die light of Brigham's 10 hypodieses (in Fundamentals of Financial Management, sixth edition). Support is found primarily for Brigham’s ignorance hypothesis, but also for his other hypotheses concerning small firms’ short-run cash flow orientation, the comparatively small size of their projects, the managers’ overall knowledge of their firms, and the irrelevance of value analysis when the value of the firm itself is unknown. Furthermore, small firms seem quite satisfied with their present techniques. Since the chief difficulty of small firms is forecasting future cash flows, changing to more sophisticated techniques offers no obvious and effective remedy for that problem.

Sprache
Englisch

Erschienen in
Journal: Journal of Small Business Finance ; ISSN: 1057-2287 ; Volume: 2 ; Year: 1993 ; Issue: 3 ; Pages: 233-249 ; Greenwich, CT: JAI Press

Klassifikation
Management
Firm Performance: Size, Diversification, and Scope
Industry Studies: Manufacturing: General
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Thema
Small Firm
Small Business
Manufacturing
DCF
Discounted Cash Flow

Ereignis
Geistige Schöpfung
(wer)
Walker, Joe
Burns, Richard
Denson, Chad
Ereignis
Veröffentlichung
(wer)
JAI Press
(wo)
Greenwich, CT
(wann)
1993

Handle
Letzte Aktualisierung
10.03.2025, 11:41 MEZ

Datenpartner

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Objekttyp

  • Artikel

Beteiligte

  • Walker, Joe
  • Burns, Richard
  • Denson, Chad
  • JAI Press

Entstanden

  • 1993

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