Corporate financial design

See for details on two additional articles {Litzenberger&joy(1975);Ang(1986)} identifying and discussing key considerations in the context of the capital expenditure approval process in large organisations.
The collection of three articles provides a source for issues in contemporary capital budgenting practices and systems in large organisations.Other good sources include journal listings and the financial press.

1)Bowler, J.L. and Gilbert C.G. (2007) “How Managers’ Everyday Decisions Create or Destroy Your Company’s Strategy” Harvard Business Review 85(2): 72-9.

The cumulative impact of the allocation of resources by managers at any level has more real-world effect on strategy than any plans developed at headquarters.

2)Litzenberger, R.H. and Joy, O.M. DECENTRALIZED CAPITAL BUDGETING DECISIONS AND SHAREHOLDER WEALTH MAXIMIZATION The Journal of Finance 30(4): 993-1102.
Abstract not available.

3)Ang, J.S. (1986) Internal rationing and agency problems in decentralized capital budgeting Project Appraisal 1(4): 235-45.

This article is a study of the institutional aspects of capital budgeting. It is shown that the process of decentralized capital budgeting suffers from several agency problems, such as over-optimistic forecasts, adverse selection, adverse incentives, recurring needs, myopic bias, measuring problems and mobility for managers. Internal rationing at the divisional level is found to be an effective complement to managerial compensation schemes in solving these agency problems.

*You are not required to use financial metrics..’Rather,given the nature of the case study,where appropriate, you may elect to consider non-financial metrics.
You may elect to consider own ‘priors’as a source.i.e.knowledge and skills acquired in other study units,information acquired through reading of the financial press-popular business press-academic journals-professional publications,the popular and financial media,but also work experience-as it allies to the topic of the assignment,to mention a few’priors’.
You may elect to search for information elsewhere.i.e.from ‘external resources’on the topic of the assignmnet.
Sources can include academic jornals professional publications financial press,popular business press and the popular business and finance media.Other sources may apply,contingent on items 1-3 above. To devlop an appreciation of the issues involved you will need to search other journal articles and sources that discuss the topic of the assignment.
-Dispalys analytical reasoning by describing, interpreting and analysing the quality of the case study information in the reprot : Insightful and through analysis of all issues identified including all key metrics.
-Dispalys evaluative reasoning by evaluating the quality of the argument and appraising how well reasoned the argument in in addressing each of the assignment questions in the report :Makes appropriate connections between the issues identified and corporate finance concepts;demonstrates good command of the conepts and analytical tools; supports diagnosis and opinions with reasons, explanations and examples; presents a fairly balanced view; interpretation is both reasonable and objective.

-Presents one’s appraisal in a well-structured report, in a conventional format suitable for the purpose by constructing a logical and cohesive flow of ideas,comments,evidence and research.Provides in-text referencing where appropriate.Includes a list of references,and where appropriate includes attachments placed at the end of the report.:Clear structure:realistic and appropriate appraisal which is clearly supprorted by all the relevant information in the case study and corporate finance concepts;supplements case study wirh relecant and extensive research;references correctly using a recognised style.

-Conveys precise and unambiguous written communication in the report by utilising the conventions of standard written report language,and mastery of the English language including syntax(snetence structure0and diction(word choice and usage)
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