Abstract
This paper empirically examines the capital budgeting practices used by European affiliates of US.-based transnational companies (TNCs). Unlike previous surveys that have contributed to the understanding of the capital budgeting process of transnationals, this study analyzes the capital budgeting practices that have been adopted by foreign affiliates. Although the results showed that foreign managers preEerred to use sophisticated techniques as their primary method of analysis, the actual usage of these advanced capital budgeting techniques was not as popular as parent company nianagers perceived. It was also found that while European managers made use of sophisticated risk-assessment techniques, they did not make extensive use of sophisticated risk-adjustment techniques.