Narratives in managers' corporate finance decisions

Abstract

This article uses the extended case method to explore senior executives' corporate finance decisions. We quantified firm's finance practices using a mail survey, and then - to resolve puzzles in managers' decision processes - conducted face-to-face interviews with chief finance officers of large listed firms. The interviews identified six themes as consistent influences on finance decisions: pressures imposed by clienteles; constraints on resources; risk management; heuristics; real options; and sustainability. We conclude that managers are logical and rational in their decisions, but employ a wider range of criteria than assumed in conventional finance theories. © 2010 The Authors. Accounti..