Abstract
The main purpose of this research was to delineate unearth lacunae in the extant capital budgeting theory and practice during the last two decades and ipso facto become springboard for future scholarships. It has analyses of various approaches, such as Web of science search and iCat search were used to locate research papers published during the last twenty years. Four criteria have been applied in selection of research papers: be an empirical study, published in English language, appeared in peer reviewed journal and full text research papers. These papers were collected from multiple databases including OneFile (GALE), SciVerse ScienceDirect (Elsevier), Informa - Taylor & Francis (CrossRef), Wiley (CrossRef), Business (JSTOR), Arts & Sciences (JSTOR), Proquest ,MEDLINE (NLM), and Wiley Online Library. Search parameters covered capital budgeting, capital budgeting decision, capital budgeting theory, capital budgeting practices, capital budgeting methods, capital budgeting models, capital budgeting tools, capital budgeting techniques, capital budgeting process and investment decision. Thematic text analyses have been explored to analyses them.
 Keywords: Capital budgeting theory and practices, capital budgeting tools for incorporating risk, discount rate
Highlights
Most changes impinge on capital investment decisions, which can invariably involve large sums of money over the long period (e.g.,Peterson and Fabozzi, 2002, Cooper et al.,2002; Dayananda et al,2002) and these decisions are critical in managing strategic change and sustaining long term corporate performance (Emmanuel, Harris and Komakech, 2010)
Multi-disciplinary concepts of capital budgeting During the past twenty years, a total of 202 research papers appeared in peer reviewed indexed journals were identified across many academic journals
Babu and Sharma (1996) studied Indian industries’ capital budgeting practices and the findings showed that 90% of the companies were using capital budgeting methods
Summary
Area of capital and capital budgeting of financial management have been attracted many researchers during the last five decades and the seminal studies culminated with presenting many theories (e.g., Portfolio Theory: Markowitz,1952,1959; Optimal Capital Structure: Modigliani and Miller,1958; Miller and Modigliani,1961; Myers,1977; Jensen,1986; Ritter, 1991; Graham and Harvey, 2001; Efficient Market Theory: Fama,1970; Roll,1977; Option Pricing Theory: Black and Scholes,1973; Arbitrage Pricing Theory : Ross, 1976; Agency Theory: Ross,1976; Myers, 2003; Atkeson and Cole,2005; Pecking Order Theory: Myers,1984; Halov and Heider,2004) and models (e.g., Mean-Variance model: Markowitz,1952; Capital Assets Pricing Model : Sharpe; 1964 Linter,1965; Roll;1977, Single Index Model: Sharpe,1963) time to time. Of Education), Sage Publications (CrossRef), INFORMS Journals, Health Reference Center Academic (Gale), University of Chicago Press Journals, Emerald Management eJournals, Directory of Open Access Journals (DOAJ),IngentaConnect, IEEE (CrossRef) All these papers were spread over across many journals including Journal of Banking and Finance, The Journal of Finance, Journal of Accounting and Economics, Management Decision, Journal of Cleaner Production, Journal of Financial Economics, Management Science, European Journal of Operational Research, Accounting Review, Journal of Economic Behavior and Organization, Long Range Planning, Energy Policy, Accounting, Organizations and Society, Computers and Mathematics with Applications. The analysis was focused on the concepts related to capital budgeting practices and theories, research design, research sampling techniques, research approach, year of publication, nature of industry and so on.
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