Financial Practice in Malaysia: Risks Assessments in Capital Budgeting

Abstract

Abstract: The objectives of tis paper is to examine the discount rates and the techniques used in addressing risks of major capital investment projects for companies listed on the Main Board and Second Board of Bursa Malaysia. The findings of the study show that the ‘companies from the Main Board and Second Board used weighted average cost of capital WAC) more than other discount rates for investments appraisal. However, the Main ‘Boast companies utilised WACC more frequently. than companies on the Second Board which are considered 10 be smaller. In terms of risks assessment, sensitivity or scenario analysis was the most favored technique used by the Main Board and Second Board ‘companies. Sophisticated techniques such as the beta analysis were applied by a_ lesser member of companies.