Abstract
Our case study will focus on the comparison between the Capital Budgeting techniques that is being employed across different countries. We also aim to explore the differences (if they are prevalent) in the existence of the so-called theory-practice gap of capital budgeting. In order to conduct a complete study, we begin the research by exploring the academic articles of countries all around the world. To begin with, we have found and researched articles covering countries like America, Europe, Asia and Oceania. Our goal is to compare the theory-practice gap between the continents and countries, and firstly summarize the traditional methods. The methods we have focused on in order to map the theory-practice gap are the ones that are most commonly emphasized in textbooks. These include methods based on discounted cash flows such as the Net Present Value method (NPV) and the Internal Rate of Return (IRR). Additionally we include the rather traditional payback period method and the relatively modern Real Options technique. Across western countries one can observe the similarities in the choice of trends and the extent to which capital budgeting methods are implemented. In doing so, a few minor differences in the theory-practice gap between these countries are also visible. Thus, our study will cover these differences as well.
