Making Capital Budgeting and Capital Structure Decisions

9919 WordsOct 25, 200840 Pages
Prepared for The Journal of Applied Corporate Finance Vol. 15, No. 1, 2002 How do CFOs make capital budgeting and capital structure decisions?1 John R. Graham Associate Professor of Finance, Fuqua School of Business, Duke University, Durham, NC 27708 USA Campbell R. Harvey Professor of Finance, Fuqua School of Business, Duke University, Durham, NC 27708 USA National Bureau of Economic Research, Cambridge, MA 02912 USA March 8, 2002 1A longer and more detailed version of this paper is published as “The Theory and Practice of Corporate Finance: Evidence from the Field” in the Journal of Financial Economics Vol. 60, 2001, pp. 187-243. This research is partially sponsored by the Financial Executives International (FEI) but the…show more content…
Using the penultimate version of the survey, we conducted beta tests at both Financial Executives International (FEI) and Duke University. 2 This involved having graduating MBA students and financial executives fill out the survey, note the required time, and provide feedback. Our beta testers took, on average, 17 minutes to complete the survey. Based on this and other feedback, we made final changes to the wording on some questions. The final version of the survey contained 15 questions, most with subparts, and was three pages long. One section collected demographic information about the sample firms. The survey instrument appears on the Internet at the address http://www.duke.edu/~charvey/Research/indexr.htm. We used two mechanisms to deliver the survey. We sent a mailing from Duke University on February 10, 1999 to each CFO in the 1998 Fortune 500 list. Independently, we faxed 4,440 surveys to FEI member firms on February 16, 1999. Three hundred thirteen of the Fortune 500 CFOs belong to the FEI, so these firms received both a fax and a mailed version. We requested 2FEI has approximately 14,000 members that hold policy-making positions as CFOs, treasurers, and controllers at 8,000 companies throughout the U.S. and Canada. Every quarter, Duke University and FEI poll these financial officers with a one-page survey on important topical issues. See How do CFOs make capital budgeting and capital structure

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