CAPITAL BUDGETING PRACTICES: A STUDY ON SEGMENT OF PULP AND PAPER BM&FBOVESPA

Abstract

Companies, as well as businesses plants, operate in an increasingly competitive environment. Thus, the decisions made on capital investments are arguably the most significant to ensure operational success. Therefore, capital budget stands out, because it is a decision-making process of long term planning for business investments. Hence, the aim of this study is to provide evidence concerning the capital budgeting practices of pulp and paper businesses. For the theoretical framework, a literary search was made on the database of the journals of Capes (Capes Journals), in the field of Applied Social Sciences, using “capital budgeting” as keyword.  The structuring of the theoretical framework has foregrounded the lack of studies on the subject, and that strengthens the fact that more studies on the capital budgeting practices of businesses are needed. To achieve the purpose of this study, questionnaires were used to collect data from seven companies of the pulp and paper industry registered by BOVESPA Stock Exchange (BM&FBOVESPA). Descriptive statistics were applied to the results in order to improve study basis for discussions. Results show that companies use mainly the Internal Rate of Return to analyze capital budgeting, performing scenario and sensitivity analysis to check investment risk. Also point out that there is similarity in the frequency of the use of techniques to define the minimum acceptable rate of return. These companies have pointed financial analysis and choice of project as the most relevant and difficult step within the investment process.