Abstract:
The main aim of this research work is to determine to what extent financial theory
has been and is being applied in the actual management and practices of capital
investment in companies, especially in the field of capital budgeting, considering the
degree of importance which is attached to capital investments in the long term survival
of these companies in Nigeria. The study reveals a shocking defiance on the part of
practicing managers to switch to the more advanced methods of project appraisal and
evaluation and a tenacious adherence to the more traditional methods which tended
towards the simple and inadequate. The reasons for this failure to adjust rest on the
difficult nature of the more advanced techniques, their external nature, the peculiarities
of the nigerian business environment and above all, the failure of the academia to evolve.
theories which would bear strongly on the Nigerian experience.
The research thus sought to reconcile the gap existing between ."theory" and
practice" as it stands in Nigeria today, by pointing a torch towards the path to healthy
investment decisions backed by result-oriented theories. Pearlbarg partly quoted that
practice is brick, theory is mortar. Both are essential and both must be good if we are
to erect a worthy structure. To determine its truism, we resorted to a survey of quoted
companies in Nigeria limiting ourselves to a sample of thirty-five companies. The study
also limited itself to the managerial practices of capital investments via capital budgeting
in general without paying specific attention to any particular aspect of the topic. The
banking industry, whose investment pattern, would paint a misleading picture on the
result of the findings was excluded from the survey.
