A qualitative analysis of capital budgeting in cotton ginning plants
Qualitative Research in Accounting & Management
ISSN: 1176-6093
Article publication date: 7 August 2017
Abstract
Purpose
To analyze capital budgeting practice in a group of small cotton ginning firms in Brazil. The study aims at describing how investment decision-making in the agribusiness context may be influenced by heuristics and by the business setting.
Design/methodology/approach
This research adopted an exploratory and qualitative approach in gauging the practice of capital budgeting in Brazilian cotton ginning firms and discussing actual managerial decision-making. Data collection involved interviews with managers of ten different firms and a further content analysis was performed.
Findings
Results reveal a practical managerial approach aimed at ensuring satisfactory net operating results in the short run. Sophistication in capital budgeting is not considered as essential, as institutional and strategic environment influences directly affect impose high risks. Investment decision-making is highly influenced by managerial experience.
Research limitations/implications
Because of the chosen research approach, results may lack generalizability. However, in addressing a specific sector in a specific location, one can identify and craft strategies in response to managerial needs more effectively.
Practical implications
The paper clarifies how heuristics, managerial experience and the institutional context may influence investment decision-making in cotton ginning operations. It also suggests how actions aimed at evaluating risk and improving the screening of investment perspectives could contribute to improve investment decisions.
Originality/value
The paper provides an in-depth perspective in addressing the practice of capital budgeting in the context of a specific activity and describing key issues related to it.
Keywords
Acknowledgements
This research was supported by Coordenação de Aperfeiçoamento de Pessoal de Ensino Superior (CAPES).
Citation
Lima, A.C., da Silveira, J.A.G., Matos, F.R.N. and Xavier, A.M. (2017), "A qualitative analysis of capital budgeting in cotton ginning plants", Qualitative Research in Accounting & Management, Vol. 14 No. 3, pp. 210-229. https://doi.org/10.1108/QRAM-07-2016-0055
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited