Department of Business Administration

Lund University School of Economics and Management

Zahida Sarwary

Zahida Sarwary defended her thesis “Puzzling out the choice of capital budgeting techniques among high-growth small and medium sized firms” on 22 November 2019. Below you can find out more about Zahida and her research, described in her own words.

I started my doctoral studies in corporate finance at LUSEM during autumn 2015. I am also serving as a lecturer for the students in business administration – banking and finance at Kristianstad University since 2012. My interest in pursuing a Ph.D. started in my first finance course as a bachelor student. Every student in a finance course will hear about net present value before the course ends. The golden rule of choosing net present value as a capital budgeting technique (CBT) to evaluate an investment was highlighted in many courses and textbooks during my years at the university. Upon turning to the literature on capital budgeting techniques, it was apparent to me that the field has been dominated by the rational economics perspective of scholars who encourage practitioners to choose capital budgeting techniques such as net present value (also labelled as sophisticated CBT). Practitioners, however, especially in small and medium sized firms (SMEs), tend to choose less sophisticated CBT, a phenomenon referred to as the theory-practice gap. The assumptions underlying net present value and other sophisticated CBTs raised questions for me about how possible these techniques are in actual practice. The supposed superiority of sophisticated CBTs might not always hold up in the organizational context; in some contexts, a less sophisticated CBT might be the more appropriate choice.

These questions piqued my interest and caused this dissertation to move beyond the well-developed body of literature on which CBT are “better” or “worse” from the theoretical perspective to exploring which are better or worse in the organizational context from the practitioner’s perspective – to enhance a dialogue between them.

Which resulted in a PhD thesis – Puzzling out the choice of capital budgeting techniques among high-growth small and medium sized firms. The aim of my dissertation is to explore the drivers of practitioners’ choices of capital budgeting techniques (CBT). Instead of following the prescriptive path of the mainstream literature, this dissertation adopts an explorative design, exploring qualitatively and quantitatively the reasons SMEs choose sophisticated or less sophisticated CBT to evaluate strategic investments. Based on the findings in the included papers, the dissertation describes when and under which conditions Swedish high-growth SMEs choose different types of CBT.

It is important to question norms and ideologies of different kind in the society and in academia and to not just accept the “truth” given to us by others. Every individual has a duty to critically question and challenge all reasoning. Looking back, I am very grateful for the possibility to tell my younger self that was sitting at her very first finance course at the university with tons of questions and frustration of the norms and ideologies that appeared around me; that your curiosity ended up in a dissertation that allows us to better understand the conditions when CBT labeled as sophisticated by the literature can actually be non-sophisticated and vice versa. I now aim to continue to argue against norms and ideologies and promote the critical thinking to academia, practitioners and to our students that I come in contact with.

Zahida Sarwary

Photo: Kerstin Weman Thornell

Zahida Sarwary