Corporate Practices on Capital Investment Decision Analysis in Region 12: Their Contributions to Maximizing Company’s Value

Abstract

This study aimed to examine the practices on capital investment decision analysis and sought to determine whether CIDA as a company practice has contributed to the improvement of shareholder’s value of selected corporations in Region 12. Corporations in Region 12 practice capital investment decision analysis / capital budgeting. Some companies follow the models specified in accounting text and some do not follow the models suggested by authorities but have formulated their own processes. Companies ensure that proposals selected have met the standards. In evaluating the investment proposals, they rely more and base their decision on qualitative factors. Although there are industries that are not benefited much by the practice on capital investment decision analysis, results show that on the average the practice has positive influence on company’s sales and profit and on the dividend received by the shareholders which are indication of enhanced company’s value.   Corporate capital investment decision analysis or capital budgeting along the processes of generation of investment opportunities, project analysis and approval, implementation, monitoring and controlling and post-implementation audit should be done and implemented by corporations for it can possibly improve or enhance company’s value.