Capital budgeting and informational impediments: A management accounting perspective
Journal
Contemporary Issues in Management Accounting
Date Issued
2007
Author(s)
Abstract
The evolution of some of the key issues related to capital budgeting makes it clear that informational impediments is a fundamental theme that has dominated much of the capital budgeting literature over the last sixty years. This chapter reviews the literature espousing this theme in the context of the following three specific, albeit related, issues: the use of sophisticated methods for selecting capital investments; asymmetric information and capital budgeting; and post-auditing capital investments. The chapter also discusses the role that management accounting systems (MAS) can play to help mitigate the informational impediments to capital budgeting. It takes a broad-scope view of MAS, considering non-financial as well as financial information, ex ante as well as ex post information, and external as well as internal information.
Type
book part