2024 Volume 32 Issue 1 Pages 87-106
The purpose of this study is to examine the impact of capital budgeting systems on the efficient allocation of capital. In the prior studies, the impact on the efficient allocation of capital budgets has not been clarified. This paper, therefore, uses a questionnaire survey and Richardson (2006)’s framework of over-investment to identify the impact of capital budgeting on the efficient allocation of capital through an empirical approach. The analysis reveals that the investment economic evaluation technique using the accounting techniques suppresses over-investment, while the DCF method, which is recommended by normative studies of management accounting as a sophisticated technique, promotes over-investment.
