Capital Budgeting Practices: A Survey of Central and Eastern European Firms

In this paper, we report the survey results from executives of companies in ten countries in Central and Eastern Europe (CEE) – Bulgaria, Croatia, Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic, and Slovenia – regarding their companies’ capital budgeting practices. We document interesting insights on how theoretical corporate finance concepts are applied by practitioners in CEE countries, and the significant variations in capital budgeting practices among twenty-four countries, four geographic regions, and three income groups. We also find significant variations between large and small/medium firms, and between local firms and firms dominated by multinational culture. The findings of our survey indicate that capital budgeting practices in CEE countries appear to be influenced mostly by firm size and multinational culture and to a lesser extent by insider ownership. EFM Classification: 220