Capital budgeting practices by non-financial companies listed on Kuwait Stock Exchange (KSE)

Figures & data

Table 1. Respondents response rate

Sector	Number of targeted companies	Number of companies responded	Response rate (%)
Services	60	35	58
Manufacturing	29	18	62
Real estate	41	25	61
Total	130	78	60

Table 2. Respondents and business backgrounds

	Frequency	Percent		Frequency	Percent
Nationality			Gender
Kuwaiti	38	48.7	Male	64	82.1
Non-Kuwaiti	40	51.3	Female	14	17.9
Total	78	100.0	Total	78	100.0
Age			Last academic qualification
Less than 25 years old	1	1.3	Diploma	10	12.8
From 26 to 35	23	29.5	Bachelor	38	48.7
From 36 to 50	42	53.8	Master level	23	29.5
More than 50 years old	12	15.4	Ph.D.	7	9.0
Total	78	100.0	Total	78	100.0
Major			Industry type
Business	22	28.2	Manufacturing	18	23.1
Accounting	15	19.2	Service	35	44.9
Finance	20	25.7	Real Estate	25	32.0
Others	21	26.9
Total	78	100.0	Total	78	100.0
Level of occupation			Level of experience
Chief Financial Officer	35	44.9	Less than 3 years	16	20.5
Chief Executive Officer	28	35.9	From 3 to 10	28	35.9
Others	15	19.2	From 11 to 15	22	28.2
Total	78	100.0	More than 15 years	12	15.4
			Total	78	100.0
Average annual number of capital budgeting projects your company considers			Your company’s annual average capital budgeting (Kuwaiti Dinar)
1–3	13	16.7	Less than 1 million	8	10.3
4–10	20	25.6	1–5 1 million	18	23.1
11–20	30	38.5	6–10 1 million	25	32.1
More than 20	15	19.2	More than 10 million	26	33.3
Total	78	100.0	Total	77	98.7

Table 3. Sources of capital budgeting ideas

	Mean	Median	St. Deviation	Minimum	Maximum	Rank based on the mean
The people who use the assets	3.94	4.00	1.049	1	5	2
Top management	4.06	4.00	1.049	1	5	1
Marketing people	3.37	4.00	1.229	1	5	4
Brainstorming groups	3.38	4.00	1.176	1	5	3

Table 4. Capital budgeting techniques employed by Kuwaiti companies

	Mean	Median	St. Deviation	Minimum	Maximum	Rank based on the mean
Accounting rate of return	3.71	4.00	1.186	1	5	3
Payback period	3.62	4.00	1.096	1	5	5
Net present value	3.83	4.00	1.144	1	5	1
Profitability index	3.81	4.00	1.064	1	5	2
Internal rate of return	3.71	4.00	1.141	1	5	3

Table 5. Choice of using capital budgeting technique

	Mean	Median	St. deviation	Minimum	Maximum	Rank based on the mean
Method’s Simplicity	3.45	4.00	1.142	1	5	5
Method’s application cost	3.58	4.00	1.068	1	5	3
Any method used will serve the purpose	3.45	4.00	1.241	1	5	5
The nature of the project under assessment	3.92	4.00	.990	1	5	1
Time required to adopt the method	3.57	4.00	1.229	1	5	4
Staff academic and professional capabilities	3.77	4.00	1.111	1	5	2

Table 6. Obstacles towards using capital budgeting techniques

	Mean	Median	Standard Deviation	Minimum	Maximum	Rank based on the mean
If management is not convinced with capital budgeting appraisal	3.60	4.00	1.199	1	5	3
Uncertainty about the outcome of the appraisal	3.82	4.00	1.170	1	5	1
Investment appraisal techniques are time consuming	3.32	4.00	1.075	1	5	6
The cost associated with the use of capital budgeting techniques	3.44	4.00	1.100	1	5	4
Lack of required experience to use capital budgeting techniques	3.40	3.00	1.283	1	5	5
Lack of required data and information to use capital budgeting techniques	3.63	4.00	1.260	1	5	2

Table 7. Non-financial factors affect capital budgeting

	Mean	Median	Standard Deviation	Minimum	Maximum	Rank based on the mean
Strategic planning	4.01	4	0.919	1	5	1
Social responsibilities	3.53	4	0.99	1	5	6
Employees capabilities	3.72	4	1.115	1	5	3
Employees responsibilities	3.56	4	1.064	1	5	5
Employees morale	3.41	4	0.999	1	5	7
Protecting environment	3.68	4	1.087	1	5	4
Corporate image	3.86	4	1.066	1	5	2

Table 8. Kruskal Wallis test

Investment appraisal techniques	Age		Last Academic Qualification		Major		Industry type
	χ^2	Sig.	χ^2	Sig.	χ^2	Sig.	χ^2	Sig.
Accounting Rate of Return	2.51	0.474	3.72	0.294	0.13	0.989	2.15	0.543
Profitability Index	11.17	0.011	3.64	0.303	3.19	0.363	2.93	0.403
Payback Period	2.721	0.437	1.303	0.728	2.41	0.492	8.23	0.041
Net Present Value	5.59	0.133	4.331	0.228	4.26	0.235	1.41	0.703
Internal Rate of Return	8.517	0.036	11.21	0.011	4.96	0.175	12.72	0.005