Capital Budgeting and Corporate Responsibility

Mr. Balraj Kistow Lecturer – Finance and International Business &

Doctoral (DBA) CandidateArthur Lok Jack Graduate School of Business, UWI

b.kistow@gsb.tt

Dr. Ron SookramLecturer – Corporate Responsibility

Arthur Lok Jack Graduate School of Business, UWIr.sookram@gsb.tt

1

Background

—Business viewed as a major cause of the social, environmental and economic problems

—New paradigms to redefine the purpose of business in society

—The sustainable enterprise—The need to account for indirect cost.—Capital expenditure and sustainability

2

The Study

—To determine the techniques employed to evaluate capital projects among firms in Trinidad and Tobago.

—To ascertain the extent to which firms consider corporate responsibility in evaluating the impact of capital investments.

3

Method

—A survey instrument was administered to 126 randomly selected firms over a one month period (March –April 2010).

—3 questionnaires rejected due to missing data.

—The remaining 123 questionnaires were coded and analyzed using SPSS.

4

Characteristics of Firms

5

IndustryServices 66%

Manufacturing 34%

Origin89% Local

11% MNCs

Years in Operation31% < 10 yrs33% 10 - 30 yrs36% over 30 yrs

Revenue Breakdown

6

Capital Budgeting Techniques

7

Capital Expenditure Decision

8

Sustainable Techniques

9

Would undertake project knowing…

10

Conclusions

—Reliance on techniques that emphasize financial yardsticks.

—The need for firms to become more aware of sustainable techniques

—As sustainability issues take the forefront, firms would be forced to adopt newer and more holistic techniques.

11