Correcting for Hubris in Project Appraisal
Author
Source
Issue
Vol. 2012, Issue 2012 (31 Dec. 2012), pp.1-4, 4 p.
Publisher
Hindawi Publishing Corporation
Publication Date
2012-06-25
Country of Publication
Egypt
No. of Pages
4
Main Subjects
Abstract EN
Behavioral finance research stresses the prevalence of overconfidence in capital budgeting practices.
To remedy this shortcoming, specifically the upward bias in cash flow forecasts, the extant literature emphasizes the reduction of such forecasts.
This paper considers the conditions under which a different adjustment is warranted, namely, an upward correction in the hurdle rate employed to evaluate the project.
It is argued here that if adverse events can have a long-term, versus a merely transitory, deleterious effect on the project's cash flows, the second adjustment is appropriate.
American Psychological Association (APA)
Schnabel, Jacques A.. 2012. Correcting for Hubris in Project Appraisal. ISRN Economics،Vol. 2012, no. 2012, pp.1-4.
https://search.emarefa.net/detail/BIM-474727
Modern Language Association (MLA)
Schnabel, Jacques A.. Correcting for Hubris in Project Appraisal. ISRN Economics No. 2012 (2012), pp.1-4.
https://search.emarefa.net/detail/BIM-474727
American Medical Association (AMA)
Schnabel, Jacques A.. Correcting for Hubris in Project Appraisal. ISRN Economics. 2012. Vol. 2012, no. 2012, pp.1-4.
https://search.emarefa.net/detail/BIM-474727
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references
Record ID
BIM-474727