Abstract

http://ssrn.com/abstract=1983844
 


 



The Impact of Capital Proposal Guidelines and Perceived Preparer Biases on Reviewers’ Investment Evaluation Decisions


Mandy M. Cheng


UNSW Australia Business School, School of Accounting

Habib Mahama


United Arab Emirates University

December 21, 2011

Australian Journal of Management, Vol. 36, No. 3, 2011

Abstract:     
Past literature has highlighted the importance of using reviewers in the evaluation of investment proposals. This study examines whether and how the decisions of these reviewers are influenced by a proposal’s conformance with company guidelines and practices, and the incentives facing the proposal preparer. Our experiment shows that, holding the proposal’s content constant, the reviewers’ evaluation decision is less favorable if the proposal does not follow the company guidelines. Further, we find that the preparer’s incentive to persist in a project negatively affects the proposal reviewers’ decisions only when the proposal deviates from company guidelines but not when it is compliant. This result suggests that company guidelines may lower the willingness of reviewers to make independent decisions.

Keywords: capital budgeting proposals, capital investment evaluation decisions, preparer biases, rule compliance

Accepted Paper Series





Not Available For Download

Date posted: January 13, 2012  

Suggested Citation

Cheng, Mandy M. and Mahama, Habib, The Impact of Capital Proposal Guidelines and Perceived Preparer Biases on Reviewers’ Investment Evaluation Decisions (December 21, 2011). Australian Journal of Management, Vol. 36, No. 3, 2011. Available at SSRN: http://ssrn.com/abstract=1983844

Contact Information

Mandy M. Cheng (Contact Author)
UNSW Australia Business School, School of Accounting ( email )
Sydney, NSW 2052
Australia
(612) 9385.6343 (Phone)
Habib Mahama
United Arab Emirates University ( email )
P.O. Box 15551
Al-Ain
United Arab Emirates
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