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This research examines the link between capital budgeting techniques and firm performance, focusing on sophisticated versus naive methods.

Sophisticated Capital Budgeting Selection Techniques and Firm Performance

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Testing capital budgeting techniques reveals no clear impact on firm performance, suggesting complexity in economic strategies.

This research examines the link between capital budgeting techniques and firm performance, focusing on sophisticated versus naive methods.
Conducted tests on firms using sophisticated versus naive capital budgeting techniques
Controlled for systematic risk, industry effects, and firm size
Performed interrupted time-series analysis on relative market returns
Found no direct link between sophisticated budgeting techniques and superior firm performance
Suggested these techniques may be just one element in a broader economic strategy
Indicated that economic recovery may depend on a combination of policies rather than budgeting methods alone

Haka et al. (1985) studied this question.

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