shefrin行为公司金融课件Chap03.ppt

Chapter 3 CAPITAL BUDGETING Behavioral Corporate Finance by Hersh Shefrin Survey Evidence Survey of CFOs who belong to FEI. 75% of CFOs report using IRR and 75% NPV. On a scale of 0 to 4, where 4 is very important, mean responses associated with both were 3.1. 57% of CFOs reported using the payback rule. Used by older, longer-tenure CEOs without MBAs. Payback most intuitive, NPV least intuitive. Affect Heuristic / Iridium In 1987 Motorola CEO Robert Galvin approved a $5 billion phone/satellite project at its first presentation. No project cash flows, NPV, IRR, or payback analysis. Project ultimately failed and was sold off to private investors. Choice vs. value – preference reversal. Overconfidence Underestimating project risk. 2 main contributors: Perceived control White males, trusting experts and engineers Inadequate planning and risk management Out of sight, out of mind (availability) Iridium surprise – cell phones price, handset size, indoor/outdoor Example of Availability Bias Hazards that affect earnings. Risk managers are more familiar with property-related hazards Financial executives are more familiar with hazards associated with improper management. In 2003, risk managers viewed the top risk as being due to fire and explosion. Financial executives viewed the top risk as being related to improper management and employee practices. Excessive Optimism Public Sector Projects 1966 study of military expenditures found actual costs exceeded forecasted costs. 2004, costs of military operations in Iraq 3 times higher than the original $60 billion estimate. Transportation infrastructure projects. Actual costs have, on average, been 28% higher than estimated costs, and Costs have been underestimated on nine out of every ten projects. Excessive Optimism Private Sector Projects Only 42% of large systems projects, lasting at least a year, come in on budget. Only 37% come in on schedule. For sales forecasts the evidence about optimism is mixed. Examples