Research Memorandum 30 2001

Research Memorandum 30 2001 The Role of Accounting Information Systems in Rationalising Investment Decisions in Manufacturing Companies in Egypt AHMED ZAKARIA ZAKI OSEMY Centre for International Accounting and Finance The Business School, University of Hull, Cottingham Road, Hull, HU6 7RX Email: A.Z.Zaki@accfin.hull.ac.uk DR BIMAL PRODHAN Contributing Professor of Finance European School of Management (Oxford) Email: bimal_prodhan@hotmail.com ISBN 1 90203 418 X

ABSTRACT The aims of this research are concerned with: a) determining to what extent manufacturing companies in Egypt rely on the current methods (financial, nonfinancial or risk analysis techniques) used in evaluating their investment projects; b) assessing the extent to which AISs applied in manufacturing companies in Egypt provide a basis for using the above-mentioned methods in evaluating their investment projects; and c) using the results of this assessment to suggest how the applied AISs might be improved to meet the needs of the process of investment decision-making. Accordingly, the present research depended on reviewing, analysing and discussing the suggestions presented in the literature related to the use of the current methods of evaluating investment projects in manufacturing companies. In addition, it depended on a combination of quantitative and qualitative approaches in a complementary way, using the survey method (questionnaire and semi-structured interviews) to achieve the research objectives. This research revealed that there is a gap between theory and practice in the area of the role of AISs in rationalising IDs in manufacturing generally and in Egypt particularly. Some of the gap can be attributed to deficiencies in the theory and some of it can be attributed to shortcomings in the AISs applied in manufacturing companies. There is also a low degree of reliance on financial, non-financial and risk analysis methods, especially in Egypt, and this can in part be attributed to shortcomings in the AISs. So, the researcher is proposing that the theory and practical use of accounting information systems in manufacturing companies should be further developed to support investment decision-making. In Egypt, this development should take as its context the increasing industrialisation of the country; technological innovations more generally (especially in the field of information technology); and the liberalisation of trade around the world. Accountants, especially those in manufacturing companies in Egypt, also need to understand modern management and organisational systems in order better to develop AISs to meet the needs of the investment decision-making process. Thus, they should expand their knowledge and skills beyond the traditional disciplinary remit of accounting theory and practice. 1. INTRODUCTION Accounting information systems (AISs) are considered among the main sources of information within manufacturing companies, which aim to serve decisionmakers in several fields and at all levels from the accounting point of view. AISs are expected, theoretically and empirically, to play a vital role in the field of investment, in particular in evaluating investment projects. Accordingly, this study aims to identify how useful an accounting information system (AIS) is in providing decision-makers with the required information for using the methods of evaluating investment projects in manufacturing companies in Egypt. 2. BACKGROUND At the beginning of the 1990s, Egypt started an economic reform policy by issuing the Public Business Sector Law (No. 203 for the year 1991), to govern the privatisation process of State Owned Enterprises (SOEs). In addition, it issued the Investment Law (No. 230 for the year 1989), the Law of Capital Market (No. 95 for 1992) and the Law of Investment Guarantees and Incentives (No. 8 for 1997). The aim was to encourage investment in Egypt. Research Memorandum 30 The University of Hull Business School 2

However, Egypt suffers from a lack of capital for investment and/or failure to allocate its available resources effectively. This may have been caused by lack of planning, control and monitoring in the country s investment programmes, because of a lack of useful information and techniques. (Genuine saving rates in Egypt during the 1970s, the 1980s and the beginning of 1990s are less than those in Israel, for example, as a Middle Eastern country, as shown in Table 1.) Table 1 Genuine Savings Rates in Egypt and Israel during the 1970s, the 1980s and the Beginning of 1990s (Percentage of GNP) Year 1970s 1980s 1990 1991 1992 1993 Egypt 10.5% 0.5% 2.6% 9.4% 15.2% 13.6% Israel 15.9% 14.4% 18.4% 18.5% 18.9% 16.7% Source: Hamilton, Kirk & Clemens, Michael (1999), Genuine Savings Rates in Developing Countries, The World Bank Economic Review, Vol. 13, No. 2, p. 349. Most manufacturing companies in Egypt are faced with the difficult problem of allocating their resources to investment proposals that will maximise their expected benefits in the long term. Therefore, with the limitation of resources, it was essential to give more attention to investment and related decisions because of the large amount of money being spent on the field of investment that would affect the present and future of manufacturing companies in Egypt. Steps had to be taken towards the rationalisation of investment decisions (IDs), aiming at attaining the optimum exploitation of the available resources to achieve the target. This process required the availability of AISs that would be capable of providing relevant (timely / open to feedback / predictable), and reliable (verifiable / neutral / faithful) accounting information. In addition, this information would have to be understandable, comparable and consistent, and it must take constraints (material / cost/benefit) into account (FASB, 1998/99, SFAC No. 2). AIS measures and reports financial information as well as other types of information that assist decision-makers in rationalising their decisions, in order to fulfil the organisational objectives (Horngren, Foster & Datar, 2000). It is worth noting that one of the most important decisions in manufacturing companies is the investment decision (ID). Hence, AISs, in general, and in manufacturing companies in particular, play a leading role in supporting decision-makers at all levels. They help them to rationalise their decisions in general and IDs in particular, by using scientific methods and measures of investment evaluation (Horngren, Foster & Datar, 2000). It is worth mentioning that not all the accounting information collected is used in rationalising investment decision-making, even if such information was originally gathered for this purpose. This information might not be useful for rationalising the investment decision-making process. Therefore, it is important to evaluate its usefulness. Lack of useful information may have negative effects, such as making a decision at the wrong time, leading to the cost consequences of lost opportunity. Also, the wrong alternative could be chosen, which would adversely affect the profitability of the corporation in the long run. Therefore, it is important to have indicators and criteria to evaluate accounting information. Since the required information is related to accounting data on the one hand and to IDs on the other, decision-makers should identify the nature of these IDs, the nature of the AIS and the role of accounting information in rationalising these decisions (Abd Allah, 1992). Research Memorandum 30 The University of Hull Business School 3

Moreover, to rationalise investment projects, especially in manufacturing companies, decision-makers should use up-to-date evaluation methods and measures, which require advanced AISs. These methods include: 2.1. Financial Appraisal Techniques These techniques include, for example payback period (PP); discounted payback period (DPP); net present value (NPV); profitability index (PI); and internal rate of return (IRR). (See for example, Bierman & Smidt, 1990; El-Tohamy, 1992; Sangester, 1993; Samuels, Wilkes & Brayshaw, 1995; Brealey & Myers, 1996, and Garrison & Noreen, 2000.) NPV is a reliable method of project appraisal and is in accord with the principle of maximising shareholders wealth. However, in practice other methods are also used. PI is used because it provides a relative measure of an investment proposal s desirability. IRR is used, because it also takes into consideration the time value of money, and managers find it easier to use, especially when it is not easy to find out the appropriate discount rate for computing the NPV of a project. PP is used because it stresses liquidity and appears to allow for risk. DPP is used as well, because it stresses liquidity, appears to allow for risk and also takes into consideration the time value of money. In addition, PP and DPP should be used as initial filters with a combination of sophisticated methods. Moreover, PP and DPP should be used to evaluate projects that have advanced manufacturing technology (AMT), where the technology is changing quickly and fashion projects that change seasonally, in order to determine the time required for an investment project to recover its initial investment before technology and fashion change. No single appraisal technique is sufficiently simple for investment evaluation and rationalising IDs. Surveys conducted by Pike on the same companies in 1975, 1981, 1986 and 1992 provide a clear picture of the changing trends in the practice of large companies within the UK. These surveys show that while all the companies surveyed conducted financial appraisal techniques on their investment projects, the choice of method varied considerably, and most companies used a combination of appraisal techniques. DCF methods greatly increased in usage from 58% in 1975 to 88% in 1992. The IRR enjoyed much greater popularity than the theoretically preferable NPV (as mentioned above). However, in recent years, there has been a marked acceleration in the adoption of the NPV. The observed increase in using DCF methods has not come at the expense of traditional methods such as PP. The PP is almost universally employed (as mentioned before); (see, Pike, 1988 & 1996, and Pike & Neale, 1999). Many of the findings here are consistent with those found by Klammer & Wilner (1991) in the USA; Sangster (1993) in Scotland and Abdel-Kader & Dugdale (1998) in the UK, for example. These surveys revealed that companies do not normally rely on any single appraisal technique, but prefer to use a combination of simple and more sophisticated techniques, and the usage of DCF techniques has increased. The Klammer & Wilner survey shows that the same company might use NPV for expansion decisions and PP for replacement projects or use PP as the primary evaluation technique and NPV as the secondary technique. The Klammer & Wilner survey shows, also, that most of the surveyed companies used one of the DCF techniques in making at least certain types of capital project decisions. For example, 86% of the firms used NPV or IRR for decisions involving expansion of existing projects. On the other hand, there is a low usage of sophisticated analytical Research Memorandum 30 The University of Hull Business School 4

techniques for general and administrative projects and social projects found in this study, because cash flow analysis, particularly on the benefit side, is most difficult. However, other findings are not consistent with those of Sangster (1993) who, based on survey comparison, argued that the use of DCF methods is no longer related to company size, the popularity of ARR has markedly declined, and company size is a factor in the usage of PP. The comparison suggested that company size is still significantly associated with a degree of use for DCF methods but not for PP. Abdel-Kader & Dugdale s survey indicated that investment projects are affected by three groups of factors: financial measures, non-financial indicators and risk measures. The conclusion of this research was based on the perceived importance of at least some of the measures or indicators within each group of factors. For example, the PP, as a financial measure, was judged important or extremely important by 75% of respondents. The quality and reliability of outputs, as a nonfinancial indicator, was considered as important or extremely important by 87% of respondents. Sensitivity analysis, as a risk measure, was considered as important or extremely important by 77% of respondents. Although the use of financial appraisal techniques in evaluating investment projects in manufacturing companies is increasing, there is a gap between theory and practice in relation to the usage of these methods. Much of this gap can be attributed to deficiencies in the theory, for example, these techniques cannot capture all relevant information, especially for evaluating investment in AMT. In other words, these techniques are unable to account for the non-financial or intangible benefits that characterise strategic ID. So, capital budgeting theory is challenged in the effectiveness of financial appraisal techniques (Hong, 1992). In this context, Ansoff (1988) mentioned that capital budgeting theory must be amended to deal with multiple conflicting objectives and supplemented to identify unique product-market opportunities and joint effects (synergy). On the other hand, the shortcomings in the AISs applied in manufacturing companies may lead to a low degree of reliance on financial appraisal techniques in evaluating their investment projects. So, accountants and/or financial directors need to expand their skills and knowledge on the one hand, and to develop AISs in their companies on the other, in order to support decisionmaking activities more than ever before, and consequently to reduce the gap between theory and practice in this field. In this context, Ansoff (1988) mentioned that manufacturing companies must renew themselves; new resources must be brought in and new products and markets must be developed. This requires improving their internal systems, particularly information systems including AISs and research and development departments. The success of financial appraisal techniques in evaluating investment projects in manufacturing companies depends, mainly, on the availability of useful information to make good estimates of the cash flows of investment projects, to select a relevant discount rate, to use appraisal techniques properly, and so on. Therefore, it is important to make a link between theory and practice in the field of evaluating investment projects in manufacturing companies on the one hand and between this field and the field of AISs on the other. 2.2. Non-financial Indicators The investment decision-making process must be viewed on a strategic basis and must include not only financial aspects, but also non-financial aspects, such as Obtaining Greater Manufacturing Flexibility (OGMF); Keeping up with Competition (KC); Experience with New Technology (ENT); Employee Morale (EM); and Research Memorandum 30 The University of Hull Business School 5

Customer Satisfaction (CS). (See for example, Lefley, 1996b; Chan, 1996; Abdel- Kader & Dugdale, 1998, and Lefley, 2000.) In today s fast moving business environment, many investment projects offer non-financial impacts, some of which cannot easily be valued in financial terms and, as a result, may leave out of the financial appraisal calculations of the conventional models. Such impacts influence the long-term performance of the manufacturing company, so it is important to identify and evaluate them in a meaningful way. Abdel-Kader & Dugdale (1998) confirm the importance of using non-financial indicators in investment appraisal. This study indicated that there is increasing use of non-financial indicators in investment appraisal, but still some difficulties in recognising all non-financial benefits because it is not easy to express them in financial terms. Although the use of non-financial indicators in evaluating investment projects in manufacturing companies is increasing, there is a gap between theory and practice in relation to usage of these indicators. Much of this gap can be attributed to deficiencies in the theory. There is no scientific method or real attempts for quantifying non-financial or intangible benefits in monetary terms. Although all attempts until now depend on estimates and subjectivity, estimate is better than no estimate. So, capital budgeting theory has been challenged regarding the effectiveness of non-financial indicators (see, Lefley, 1996a & 1996b, and Abdel- Kader & Dugdale, 1998). On the other hand, the shortcomings in the AISs applied in manufacturing companies may lead to a low degree of reliance on non-financial indicators in evaluating their investment projects. So, accountants and/or financial directors need to expand their skills and knowledge on the one hand, and to develop AISs in their companies on the other, in order to support decision-making activities more than ever before, and consequently to reduce the gap between theory and practice in this field. The success of non-financial indicators in evaluating investment projects in manufacturing companies depends, mainly, on the availability of useful information to use these indicators. The usage of these indicators requires useful non-financial information besides financial information to enable decision-makers to measure qualitative or intangible benefits and to forecast the potential technology changes in AMT. Therefore, it is important to make a link between theory and practice in the field of evaluating investment projects in manufacturing companies on the one hand and between this field and the field of AISs on the other. 2.3. Risk Analysis Techniques It is also necessary to take into account the risk analysis of investment, because it is an important aspect of the investment decision-making process. There are a number of techniques for analysing investment risk, such as sensitivity analysis (SA); simulation models (SM); probability tree (PT); adjustment of required payback period (ARPP); and Adjustment of discount rate (ADR). (See for example, Bierman & Smidt, 1990; Petty et al., 1993; Abdel-Kader & Dugdale, 1998, and Pike & Neale, 1999.) In practice, the use of formal risk analysis techniques is expanding. Most manufacturing companies use more than one technique for analysing risk for their investment projects. The SA technique is the most popular technique in analysing investment risks because it is a good technique, which decision-makers understand how to use it perfectly, and because of the availability of computer packages which can help in applying it in practice. This result is consistent with the findings of Pike Research Memorandum 30 The University of Hull Business School 6

(1988 & 1996); Klammer & Wilner (1991); Sullivan & Smith (1994), and Abdel- Kader & Dugdale (1998), for example. Pike s surveys and that of Abdel-Kader & Dugdale showed that 88% and 77%, respectively, of large companies within the UK used SA in analysing investment risks for their projects. Sullivan & Smith s and Klammer & Wilner s surveys showed that 29% and 57%, respectively, of companies within the USA used SA in analysing investment risks for their projects. These surveys revealed that companies do not normally rely on any single technique, but prefer to use a combination of these techniques. According to Pike s surveys there is an increase in using all risk analysis techniques because companies now consider risk and uncertainty in their IDs (see also, Pike & Neale, 1999). Although the use of risk analysis techniques in evaluating investment projects in manufacturing companies is increasing, there is a gap between theory and practice in relation to usage of these techniques. Much of this gap can be attributed to deficiencies in the theory. So, capital budgeting theory is challenged in the effectiveness of risk analysis techniques (see, Pike & Ho, 1991, and Pike, 1966). On the other hand, the shortcomings in the AISs applied in manufacturing companies may lead to a low degree of reliance on risk analysis techniques in evaluating their investment projects. So, accountants and/or financial directors need to expand their skills and knowledge on the one hand, and to develop AISs in their companies on the other, in order to support decision-making activities more than ever before, and consequently to reduce the gap between theory and practice in this field. The success of risk analysis techniques in evaluating investment projects in manufacturing companies depends, mainly, on the availability of useful information to use these techniques. Therefore, it is important to make a link between theory and practice in the field of evaluating investment projects in manufacturing companies on the one hand and between this field and the field of AISs on the other. 3. RESEARCH PROBLEM In the context of encouraging the private sector in Egypt to make more investments in several fields, it is necessary to evaluate these investments and to rationalise the related decisions. This can be done by relying on the current methods of evaluating investment projects, especially the methods used in evaluating AMT, because AMT has become the central drive of manufacturing companies. However, there is a gap between theory and practice in the field of evaluating investment projects in Egypt. According to Mubarak (1993) 7% of manufacturing companies relied on NPV, 20% on IRR, 33% on PP, 25% on accounting rate of return (ARR) and 15% on other methods. In addition, risk analysis of Egyptian manufacturing companies of investment projects was performed by only 21%. Moreover, Zaki (1993) noticed that most of these companies depend on ARR in evaluating their investment projects. Most of these companies only made financial feasibility studies of their investment projects instead of making a comprehensive feasibility study, including marketing feasibility, technical feasibility, financial feasibility, economic feasibility and social feasibility. Moreover, the researcher s pilot study in 1997 revealed that the investment appraisal techniques most used are not those advocated by the majority of capital budgeting and investment appraisal textbooks. In addition, most of these companies still depend on manual information systems. These information systems cannot provide decision-makers with the information required for using current methods of evaluating investment projects, either financial, non-financial or risk analysis techniques. Research Memorandum 30 The University of Hull Business School 7

Hence, the problem of this research is that in manufacturing companies in Egypt there is a low degree of reliance on the current methods of evaluating investment projects, whether financial appraisal techniques, non-financial indicators or risk analysis techniques. This problem is perhaps due to the shortcomings in the AISs applied in these companies in providing decision-makers with useful information to achieve the evaluation process, especially reliable future cash flows of investment projects and reliable information about intangible/non-financial benefits. This problem led to the failure of some manufacturing companies in Egypt, especially in the case of state owned enterprises (SOEs), to attain optimum exploitation of their limited resources and to achieve their objectives properly. For example, in 1996, 100 companies listed in the Egyptian stock market failed and disappeared from the market, because they could not rationalise their decisions, including IDs (Capital Market Authority [CMA], in: National Bank of Egypt [NBE], 1999a, p. 105). In addition, during the same period the Egyptian public sector included 90 ailing companies (NBE, 1996, p. 40). Therefore, the Egyptian government is adopting an economic reform policy to improve the efficiency of the ailing units on one hand, and to improve the Egyptian economy as a whole on the other. 4. RESEARCH HYPOTHESIS In the terms of the research problem, this research is based on the following hypothesis: The shortcomings of the AISs applied in manufacturing companies in Egypt led to a low degree of reliance on current methods of evaluating investment projects to evaluate their investment projects. 5. RESEARCH QUESTIONS To test the research hypothesis, this research includes the following questions: A. What is the level of reliance of today s manufacturing companies in Egypt on current methods of evaluating investment projects? B. How useful are the AISs applied in manufacturing companies in Egypt in using the current methods of evaluating investment projects? C. How can the AISs applied in manufacturing companies in Egypt be improved to meet the needs of the process of investment decision-making? 6. RESEARCH OBJECTIVES AND IMPORTANCE In the terms of the research questions, the research objectives are concerned with: determining to what extent manufacturing companies in Egypt rely on the current methods (financial, non-financial or risk analysis techniques) used in evaluating their investment projects; assessing the extent to which the AISs applied by manufacturing companies in Egypt provide a basis for using the above-mentioned methods to evaluate their investment projects; and using the results of this assessment to suggest how the AISs applied be improved to meet the needs of the process of investment decision-making. However, to raise the current level of reliance on current methods used in evaluating investment projects in manufacturing companies in Egypt, it is necessary to improve the quality of AISs in these companies. Research Memorandum 30 The University of Hull Business School 8

Therefore, the importance of this research lies in the necessity of developing AISs in manufacturing companies in Egypt for rationalising IDs in these companies, and consequently, attaining the optimum exploitation of the available resources and achieving their targets. In other words, the quality of AISs in these companies can be improved in order to provide decision-makers with useful information to enable them to use the current methods of evaluation investment projects. 7. RESEARCH APPROACHES Accordingly, the present research depends on a combination of quantitative and qualitative approaches in a complementary way, using the survey method. The quantitative approach is implemented through questionnaires and the qualitative approach through interviews. It is worth noting that there are other research approaches, such as case study, grounded theory, action research, ethnographic research and experiments. These approaches are important in carrying out empirical studies and each of them has advantages and disadvantages. However, the researcher selected the survey method because it was the most suitable approach for achieving the aims of this study, which is concerned with surveying attitudes and practices, and because it is hoped to be able, to some extent, to generalise the results. In addition, survey research is a less costly method of gathering organisational data than other methods. However, the study reported on in this research seeks to combine the advantages of a descriptive and analytic survey. In other words, it seeks to combine quantitative and qualitative research methods in the same study. The quantitative research, based on questionnaires, aims to determine the level of reliance of today s manufacturing companies in Egypt on the current methods used in evaluating their investment projects, and to explore the role of AISs applied in these companies in evaluating investment projects. On the other hand, the qualitative research, based on semi-structured interviews, aims to explore in greater detail and depth the views and experience of people in these companies about the relationship between the AISs applied in manufacturing companies in Egypt and the process of evaluating investment projects. 8. RESEARCH SAMPLE The research sample was selected as follows: Manufacturing Sectors in Egypt Engineering & Electrical Sector (5105 companies including 151 corporations) Chemicals & Pharmaceuticals Sector (2236 companies including 143 corporations) Building Materials Sector (1762 companies including 111corporations) Spinning, Weaving, and Clothes Sector (4399 companies including 132 corporations) Food Sector (4591 companies including 139 corporations) Population Sample Frame Sample Figure 1 Research Population Source: The General Authority For Manufacturing, Information Centre, 1999, The Green Business Guide, Companies Directory, 1999 & The Central Agency for Public Mobilisation and Statistics, Information Centre, 1997. Research Memorandum 30 The University of Hull Business School 9

Accordingly, the population of the present study was three of the five manufacturing sectors in Egypt (60% of the manufacturing sectors in Egypt). These sectors are the Engineering & Electrical Sector, the Chemicals & Pharmaceuticals Sector and the Building Materials Sector (the researcher depended on the stratified sampling method to identify the population of the present study). The researcher selected only three sectors because it would be too arduous and time-consuming to survey all manufacturing companies in Egypt, since the companies are scattered across different parts of the country (in the north, the south, the east, the west and the middle, respectively). In other words, insufficient time and resources were available to conduct research on all of the manufacturing sectors in Egypt that could potentially be included in a study. On the other hand, the researcher has selected three sectors to expand the range of the survey as far as possible. The researcher selected these types of sectors because they are considered the main pillars of the industrial base in Egypt and they represent a large proportion of the manufacturing companies in Egypt. Moreover, some companies within these sectors have been privatised under the Egyptian privatisation programme. The researcher concentrated on corporations from the selected sectors, whether listed in the stock market or not, as a sample frame because these companies are big, and have intensive capital, a high level of sales and AMT. The broad sampling frame for this study was extracted from the Companies Directory in Egypt. The sample companies within the sample frame were selected according to the probability method, and using a simple random sample. This was done by giving each company a number, shuffling these numbers, then drawing out as many as were needed for the sample. This process was carried out for each sector separately, to select approximately 40 companies from each sector for the questionnaire. The researcher planned to perform approximately 10 interviews from each sector. The interviews sample was selected to include 5 companies from the public sector, including 2 privatised companies, 3 companies from the private sector and 2 companies from the joint venture sector. The questionnaire sample for the present research consisted of 97 companies belonging to the Engineering & Electrical Sector, the Chemicals & Pharmaceuticals Sector and the Building Materials Sector. The sample of interviews for the present research included 56 persons from 25 companies belonging to the same sectors. The interview sample was selected randomly from the questionnaire sample with the number of companies belonging to each sector nearly equal. The questionnaires were given to either or both (according to availability) of the companies financial directors and/or management accountants. Similarly, the interviews were conducted with the companies financial directors and/or management accountants and sometimes, also, with the managing director. The researcher selected the companies financial directors and the management accountants because they are the nearest persons to the applied AIS and the process of evaluating investment projects. Moreover, this group is expected to be most knowledgeable about the study topic, through their experience in this field, because the management accountant participates in data processing and the financial director participates in the decision-making process. It is necessary to check that the sample is representative of the population. The sample of the current study is considered representative of the population because it includes companies from different areas in Egypt and covers the selected three sectors. The researcher concentrated on corporations from the selected sectors in order Research Memorandum 30 The University of Hull Business School 10

to select large companies. Some of the selected companies are listed in the stock market and others are not. In addition, some of these companies have AMT and others have not. Moreover, some companies within these sectors have been privatised under the Egyptian privatisation programme. 9. RESEARCH INSTRUMENTS To achieve the aims of this study, the survey method employed was selected as the most suitable approach. As mentioned previously, the research aims depend on exploring the level of reliance of manufacturing companies in Egypt on the current methods in evaluating their investment projects and the role of the AISs applied in these companies in achieving the evaluation process. So, the survey instruments, personal interview and questionnaire, were designed to identify the relationship between the AISs applied in manufacturing companies in Egypt and the level of reliance on the current methods of evaluating investment projects. Therefore, this survey method is considered the most effective way of meeting the research objectives. 9.1. Administration of the Questionnaire Most of the questionnaires were delivered to manufacturing companies in the sample by mail and some of them were delivered personally. The researcher asked every respondent (management accountants and/or financial directors) to read the covering letter and answer the questions in the questionnaire. Most of the questionnaires were collected personally and some of them were returned by mail to the researcher's address, either in Egypt or in England. The sample included 97 corporate companies belonging to the Engineering & Electrical Sector, the Chemicals & Pharmaceuticals Sector and the Building Materials Sector. The researcher distributed 120 questionnaires, of which 97 were returned, as shown in Table 2: Table 2 Questionnaire Response Rate, by Industry Value Label (All Companies Were Corporations) Distributed Collected Questionnaires Questionnaires No. No. % Engineering & Electrical Industries 45 35 78% Pharmaceuticals & Chemicals Industries 40 34 85% Building Materials Industries 35 28 80% Total 120 97 81% 9.2. Administration of the Interviews The interviews were conducted with the companies management accountants and/or financial directors, and sometimes also with the managing director. The sample of interviews included 56 persons from 25 companies, as shown in Table 3: Table 3 Interview Sample, by Industry (All Companies Were Corporations) Value Label Persons Companies No. % No. % Engineering & Electrical Industries 21 38 9 36 Pharmaceuticals & Chemicals Industries 18 32 8 32 Building Materials Industries 17 30 8 32 Total 56 100 25 100 Research Memorandum 30 The University of Hull Business School 11

At the beginning of each interview, the researcher started by explaining to the interviewees the aims of the interview. Then, the researcher informed the interviewee that all the information would be confidential and would be used only for the purpose of the present research. Questions were asked according to the interview schedule. Each question was asked in turn, the respondent being allowed to give a full and considered answer before moving on to the next. At the end of the interview, the researcher thanked the interviewees for their co-operation and asked them about the questionnaire. Each interview lasted around 30 minutes. Tape-recording was not used for any of the interviews because most respondents were unwilling to have the discussion recorded. The researcher first recorded the questions immediately by writing each answer carefully as the respondent answered it. If the answer was not clear he asked the interviewee or interviewees for explanation. 10. PRESENTING AND ANALYSING THE MAIN QUESTIONNAIRES FINDINGS The data that are related to the current study are qualitative (some interview data) and quantitative (questionnaire data and some interview data). The quantitative data that are related to the current study are nominal (some data in sections 1 and 3, and section 4 in the questionnaire, and some interview data), because they are distinct categories of a variable. Others are ordinal data (some of sections 1 and 3, and section 2 in the questionnaire), because the categories are ranked according to a specific scale, e.g. always employed, usually employed, sometimes employed, rarely employed and never employed in section 2 in the questionnaire. It is worth mentioning that with interval or ratio data it is more appropriate to use a parametric test, whereas for nominal and ordinal data it is more appropriate to use a non-parametric test. Therefore, the researcher used non-parametric tests in this study, particularly the cross-tabulation, chi-square (χ 2 ) tests and correlation coefficient. The researcher used the cross-tabulation to test the relationship between the type of AISs applied in manufacturing companies in Egypt and using the methods of evaluating investment projects, and the sources of shortcomings in AISs. The researcher also used chi-square (χ 2 ) tests to measure the associated significance between the AISs applied in manufacturing companies in Egypt and using the current methods of evaluating investment projects. Moreover, he used the correlation coefficient to measure the strength and the direction of the relationships between the AISs applied in manufacturing companies in Egypt and using the current methods of evaluating investment projects. The researcher also used frequency distributions to present and analyse the data collected by questionnaire and some data collected by interview, in order to determine the level of reliance on current methods used in evaluating investment projects, and the usefulness of the AISs applied in manufacturing companies in Egypt. These tools are calculated via SPSS to achieve the research objectives. The researcher selected these tools because these tests are suitable for analysing the collected data (especially the data collected by using the questionnaire), because these data were categorical in nature. In addition, these tests are suitable for achieving the aims of this study. Qualitative analysis was used in order to analyse the data collected by using interviews. 10.1. Description of the Sample Companies According to the questionnaire findings, most of the manufacturing companies in the sample were large and capital intensive, and they have been in existence for Research Memorandum 30 The University of Hull Business School 12

different lengths of time. A large number of these companies were owned by the public sector and some of them have been privatised under the Egyptian privatisation programme. Egypt s private sector is expanding under the Egyptian privatisation programme and is being encouraged by the Egyptian government to invest in the manufacturing field. Moreover, most of these companies are registered in the Egyptian stock market and some of them try to use AMT. Hence, manufacturing companies in Egypt (based on the sample companies) have long-term plans for proposed projects. The life of a project is usually around 20 years, according to the respondents. So, capital-budgeting decisions consider that revenues are delivered and costs are incurred over relatively long periods. Accordingly, these companies have long-term direct and indirect effects, either tangible or intangible, in the various sectors. In addition, these companies play a vital role in growth and development strategies in Egypt. Therefore, in the manufacturing sector in Egypt, considerable attention and a complete study are needed before making the decision to establish any factory. This requires a comprehensive feasibility study for evaluating all aspects, either direct or indirect, tangible or intangible. For this reason, the researcher suggests that it is necessary to use the current methods of evaluating investment projects, both financial and non-financial, and of analysing investment risk. This should be done in the light of the framework of advanced AISs. 10.2. The Level of Reliance of the Sample Companies on the Current Financial Methods Used in Evaluating Investment Projects, and the Relationship between the Use of these Methods and the AISs Applied in these Companies According to the findings related to use of financial techniques in evaluating investment projects, it can be seen that most of the sample companies used ARR in evaluating their investment projects. In addition, some of these companies used PP. Moreover, a few of them used one or more of the DCF methods, such as DPP, NPV, IRR or PI. This means that most of the sample companies used the easiest method, and did not depend on DCF in evaluating their investment projects. Hence, the level of reliance of manufacturing companies in Egypt on financial appraisal techniques in evaluating their investment projects is low, as shown in Table 4. Table 4 Using Financial Appraisal Techniques in Manufacturing Companies in Egypt Value Label PP DPP NPV IRR PI ARR No. % No. % No. % No. % No. % No. % Always/Usually Employed 34 35 10 10 08 08 18 19 20 21 41 42 Employed to Some Extent 09 09 16 17 16 17 11 11 06 06 13 13 Rarely/Never Employed 54 56 71 73 73 75 68 70 71 73 43 45 Total 97 100 97 100 97 100 97 100 97 100 97 100 Rank 2 5 6 3 4 1 In addition, there is no statistically significant association between the type of AIS applied in the sample companies, whether manually or computerised (fully or partially), and the use of financial appraisal techniques in evaluating their investment projects, except the use of ARR. This means that the use of ARR in evaluating investment projects in the sample companies depended on the type of AISs applied in these companies. In other words, there is a difference in depending on computerised systems and manual systems in evaluating investment projects by using ARR. Research Memorandum 30 The University of Hull Business School 13

Moreover, there is no correlation between the type of AISs applied in the sample companies and the use of PP, DPP, NPV, IRR and PI in evaluating their investment projects, as shown in Table 9.2. On the other hand, the correlation between the AISs applied in the sample companies and the use of ARR in evaluating their investment projects is positive, but it is not strong, as shown in Table 5. This means that the use of ARR in evaluating investment projects in the sample companies depended on the type of AISs applied in these companies. Table 5 Chi-square and the Correlation Coefficient of the Applied AISs and the Use of Financial Appraisal Methods Evaluation Chi-square (χ 2 ) Correlation Coefficient Method Value Significance Value Significance PP.09166.76208.03074.76502 DPP.05291.81808.02335.82038 NPV.26169.60896.05194.61337 IRR.00811.92823.00915.92915 PI.05291.81808.02335.82038 ARR 6.44736.01111.25781.01079 This suggests that the AISs applied in the sample companies provided information to use financial appraisal techniques in evaluating investment projects, but this information was incomplete and/or inaccurate. Therefore, these systems need some development to be more advanced in order to provide decision-makers with the information required for evaluating their investment projects by using financial appraisal techniques. From Table 6, it can be seen that most of the large companies in the UK and Scotland, and the large manufacturing companies in Japan depended on PP in evaluating their investment projects, whereas most of the large manufacturing companies in the USA, depended on DCF methods (NPV and/or IRR) in evaluating their investment projects, while most of the large manufacturing companies in Egypt depended on ARR in evaluating their investment projects. This means that large manufacturing companies in Egypt chose the easiest methods, since decision-makers in these companies faced some difficulties in using DCF methods and PP. In addition, the use of DCF methods and PP was higher in the current study than in Mubarak s (1993) study. This result might be ascribed to some improvements within the large manufacturing companies in Egypt affecting the process of investment decision-making over the period between the two studies. On the other hand, there were a large number of companies in the UK and the USA have been found to use DCF methods. This reflects the importance of these methods in evaluating investment projects for maximising NPV and/or IRR and taking into consideration PP. On the contrary, Japanese companies depended, mainly, on PP in evaluating their investment projects. This reflects the fact that these companies operate in a changeable environment with high technology and speedy obsolescence of products, moreover they are capital intensive. Consequently, they need to recover their initial investments as soon as they can to use these investments in new technology. Research Memorandum 30 The University of Hull Business School 14

Table 6 The Use of Financial Appraisal Techniques in Egypt and Some Other Countries (%) Financial Appraisal Techniques Japan (Mubarak, 1992) USA (Sullivan & Smith, 1994) UK (Pike, 1992) [100 Co]. No. % Scotland (Sangster, 1989) [107 Co.] No. % Egypt (Mubarak, 1992) [151 Co.] No. % Egypt (The Current Study, 1999) [97 Co.] No. % No. % No. % PP 94 94 83 78 n.a. 52 n.a. 59 50 33 43 44 DPP - - - - - 26 27 NPV and/or IRR 88 88 78 73 n.a. 10 n.a. 80 41 27 40 41 PI - - - - - 26 27 ARR and/or 50 50 33 31 n.a. 36 n.a. 57 61 40 54 56 Other Note: A) Pike s study (was published in 1996) and Sangster s study (was published in 1993) were on large companies generally, while Mubarak s study (was published in 1993), Sullivan & Smith s study (was published in 1994) and the current study were on large manufacturing companies. B) The reported percentages exceed 100% because many companies surveyed used more than one technique. Moreover, from Table 7 it can be seen that the majority of large companies in the UK and Scotland used more than two methods, while the majority of the large manufacturing companies in Egypt (based on the sample companies) used two methods or or fewer in evaluating their investment projects. Table 7 Comparison of the Frequency of the Use of Combinations of Financial Appraisal Techniques in Scotland, the UK and Egypt (%) The Number of Used Methods UK (Pike, 1992) Scotland (Sangster, 1989) Egypt (The Current Study) No. % No. % No. % No Methods 0 0 09 08.0 07 07 One Method 04 04 25 23.5 32 33 Two Methods 28 28 27 25.5 22 23 Three Methods 32 32 33 31.0 21 22 Four Methods 36 36 13 12.0 15 15 Five Methods 0 0 0 0 0 0 Six Methods 0 0 0 0 0 0 Total 100 100 107 100 97 100 This reflects the importance of the usage of financial appraisal methods in the majority of large companies in the UK and Scotland on the one hand, and the capability of AISs in these companies to provide decision-makers with the information required to achieve the evaluation process properly and to use the combination of evaluation methods on the other hand. In contrast, the importance of the usage of financial appraisal methods in the majority of manufacturing companies in Egypt is low because the capability of AISs in these companies to provide decisionmakers with the information required to achieve the evaluation process properly and to use the combination of evaluation methods is low. Research Memorandum 30 The University of Hull Business School 15

10.3. The Level of Reliance of the Sample Companies on the Current Nonfinancial Indicators Used in Evaluating Investment Projects, and the Relationship between the Use of these Indicators and the AISs Applied in these Companies According to the findings related to the use of non-financial indicators in evaluating investment projects, it can be seen that most of the sample companies made some use of non-financial indicators in evaluating their investment projects, but did not do so always. Hence, the level of reliance of manufacturing companies in Egypt on the current non-financial indicators used in evaluating investment projects is moderate, as shown in Table 8. Table 8 Using Non-financial Indicators in Manufacturing Companies in Egypt Value Label OGMF KC ENT EM CS No. % No. % No. % No. % No. % Always/Usually Employed 25 26 33 34 21 22 23 24 51 53 Employed to Some Extent 18 18 22 23 17 17 17 17 07 07 Rarely/Never Employed 54 56 42 43 59 61 57 59 39 40 Total 97 100 97 100 97 100 97 100 97 100 Rank 3 2 5 4 1 Note: OGMF [Obtaining Greater Manufacturing Flexibility], KC [Keeping up with Competition], ENT [Experience with New Technology], EM [Employee Morale] and CS [Customer Satisfaction]. Moreover, there is no statistically significant association between the AISs applied in the sample companies and the use of OGMF, ENT and EM indicators, whereas there is a statistically significant association between the AISs applied in the sample companies and the use of KC and CS. This means that the use of KC and CS in evaluating investment projects in the sample companies depends on the type of AISs applied in these companies. In other words, there is a difference in depending on computerised systems and manual systems in evaluating investment projects by using KC and CS. In addition, the correlation between the type of AISs applied in the sample companies and the use of OGMF, ENT and EM in evaluating their investment projects is positive, but it is very week, as shown in Table 9. On the other hand, the correlation between the AISs applied in the sample companies and the use of KC and CS in evaluating their investment projects is positive, but it is not strong. Table 9 Chi-square and the Correlation Coefficient of the Applied AISs and the Use of Non-financial Appraisal Methods Evaluation Chi-square (χ 2 ) Correlation Coefficient Method Value Significance Value Significance OGMF 2.97115.08476.17502.08642 KC 4.78895.02864.22220.02871 ENT.03756.84633.01968.84828 EM 3.46966.06250.18913.06355 CS 4.35883.03682.21198.03712 This means that some of the sample companies used some non-financial indicators in evaluating investment projects regardless of the type of the applied AIS, whether manual or computerised (fully or partially). This reflects that decisionmakers in most of the sample companies did not depend on AISs in applying nonfinancial indicators in evaluating their investment projects. Decision-makers think Research Memorandum 30 The University of Hull Business School 16

that they have in their memory a vast store of knowledge gained from training and experience, and they depend on this knowledge in the decision-making process. Therefore, the researcher suggests that the applied AISs need some developments to be more advanced in order to provide decision-makers with all the information required for using the above-mentioned indicators. From Table 10, it can be seen that the majority of large manufacturing companies in the UK used the non-financial indicators mentioned in evaluating their investment projects, whereas the majority of large manufacturing companies in Egypt used KC and CS indicators and less than 50% used OGMF, ENT and EM indicators. The ranking of using non-financial indicators in both the UK and Egypt is the same, but the usage level in the UK is higher than in Egypt because it is a developed country, whereas Egypt is still a developing country and facilities, culture, knowledge and so on, are different. The most popular indicator in both the UK and Egypt is the CS indicator. Table 10 The Use of Non-financial Indicators in Egypt and the UK Non-financial Indicators Rank UK (Abdel-Kader & Dugdale, 1996) (99 Companies) Egypt (The Current Study, 1999) (97 Companies) No. % No. % OGMF 3 91 92 43 44 KC 2 96 97 55 57 ENT 5 54 55 38 39 EM 4 59 60 40 41 CS 1 96 97 58 60 Note: A) Abdel-Kader & Dugdale s study (was published in 1998) and the current study were on large manufacturing companies. B) The reported percentages exceed 100% because many companies surveyed used more than one technique. On the other hand, manufacturing companies in the UK have a better level of AMT than in Egypt, as shown in Table 11. Therefore, the degree of reliance on nonfinancial indicators in these companies in the UK is greater than in Egypt. Table 11 Level of AMT in Manufacturing Companies in Egypt and The UK The Type Of AMT UK (Abdel-Kader & Dugdale, 1996) (99 Companies) Egypt (The Current Study, 1999) (97 Companies) No. % No. % Non-AMT Companies 23 23.2 58 59.79 Less Integrated AMT 33 33.3 34 35.05 Companies Fully Integrated AMT 43 43.5 05 05.16 Companies Total 99 100 97 100 Moreover from Table 12 it can be seen that the majority of companies in Egypt used two indicators or more in evaluating their investment projects, but also depended heavily on judgement and intuition as interviewees said. This means that the capability of AISs in these companies to provide decision-makers with the information required for using non-financial indicators in evaluating their investment projects is low. Research Memorandum 30 The University of Hull Business School 17

Table 12 The Frequency of the Use of Combinations of Non-financial Indicators in Egypt The Number of Used Egypt (The Current Study) Indicators No. % No Indicators 04 04 One Indicator 24 25 Two Indicators 24 25 Three Indicators 26 27 Four Indicators 11 11 Five Indicators 08 08 Total 97 100 10.4. The Level of Reliance of the Sample Companies on the Current Methods Used in Analysing Investment Risks, and the Relationship between the Use of these Methods and the AISs Applied in these Companies According to the findings related to using investment risk analysis techniques, it can be seen that the most popular method used in analysing investment risk in the sample companies was sensitivity analysis. However, the majority of the sample companies did not depend on the current techniques used in analysing investment risks, as shown in Table 13. Hence, the level of reliance of manufacturing companies in Egypt on the current techniques used in analysing investment risks is low. Table 13 Using Investment Risk Analysis Techniques in the Sample Companies Value Label SA SM PT ARPP ADR No. % No. % No. % No. % No. % Always/Usually Employed 17 18 05 05 09 09 20 21 10 10 Employed to Some Extent 16 16 10 10 08 08 10 10 15 16 Rarely/Never Employed 64 66 82 85 80 83 67 69 72 74 Total 97 100 97 100 97 100 97 100 97 100 Rank 1 5 4 2 3 Note: SA [Sensitivity Analysis], SM [Simulation Models], PT [Probability Tree], ARPP [Adjustment of Required Payback Period], and ADR [Adjustment Discount Rate]. Moreover, there is no statistically significant association between the AISs applied in the sample companies and the use of these techniques. In addition, there is no correlation between the type of AISs applied in the sample companies and the use of these techniques in analysing investment risks, as shown in the following table: Research Memorandum 30 The University of Hull Business School 18

Table 14 Chi-square and the Correlation Coefficient of the Applied AISs and the Use of Risk Analysis Techniques Evaluation Method Chi-square (χ 2 ) Correlation Coefficient Value Significance Value Significance SA.33473.56288.05874.56762 SM.70332.40167 -.08515.40695 PT.24137.62322 -.04988.62752 ARPP.52457.46890.07354.47408 ADR.00997.92048.01014.92151 This means the AISs applied in the sample companies do not provide enough information to use these techniques in analysing their investment risks. In other words, there is no link between the applied AIS in the sample companies and the use of sensitivity analysis. This means that decision-makers in most of the sample companies did not depend on AISs in applying risk analysis techniques in analysing risks related to their investment projects. Decision-makers think that they have in their memory a vast store of knowledge gained from training and experience, and they depend on this knowledge in determining the risk level related to their investment projects. So, these systems need some development to be more advanced and to provide useful information for using these techniques. From Table 15, it can be seen that the most popular method used in analysing investment risks in manufacturing companies in the UK and Egypt is the SA technique because it is a good technique and easy to use and understand. However, most large manufacturing companies in the USA used other techniques, such as carrying out subjective and non-quantitative assessment. This reflects the fact that subjectivity, intuition and judgement play a role in the investment decision-making process. Table 15 The Use of Techniques of Analysing Investment Risks in Egypt, the USA and the UK Technique USA (Sullivan & Smith, 1994) UK (Sullivan & Smith, 1994) UK (Pike, 1992) [100 Co.] No. % No. % No. % Egypt (The Current Study,1999) [97 Co.] No. % SA n.a. 29 n.a. 63 86 86 33 34 SM - - - 15 16 PT n.a. 12 n.a. 15 47 47 17 18 ARPP n.a. 17 n.a. 34 59 59 30 31 ADR n.a. 18 n.a. 42 64 64 25 26 Other n.a. 54 n.a. 22 - - Note: A) Pike s study (was published in 1996) was on large companies generally, while Sullivan & Smith s study (was published in 1994) and the current study were on large manufacturing companies. B) The reported percentages exceed 100% because many companies surveyed used more than one technique. Moreover from Table 16 it can be seen that manufacturing companies in Egypt (based on the sample companies) used two methods or fewer in analysing investment risks for their projects, and around 22% of the sample companies did not use any method and depended on intuition and experience. This means that the capability of AISs in these companies to provide decision-makers with the information required for using risk analysis techniques in evaluating their investment projects properly is low. Research Memorandum 30 The University of Hull Business School 19

Table 16 The Frequency of the Use of Combinations of Risk Analysis Techniques in Egypt The Number of Used Egypt (The Current Study) Methods No. % No Methods 21 22 One Method 37 38 Two Methods 22 23 Three Methods 11 11 Four Methods 06 06 Five Methods 00 00 Total 97 100 10.5. The Nature of AISs Applied in Manufacturing Companies in Egypt and the Investment Decision-making Process According to the findings related to the nature of AIS and the investment decision-making process in manufacturing companies in Egypt, there were some weaknesses in AISs in the sample companies. The AISs applied in the majority of the sample companies depended on a combination of manual and computer systems (i.e. partially computerised systems), with 53 respondents, representing 54.6% of the total sample. The information provided by these systems may not be timely or predictive because of the absence of feedback systems in some companies (27%). The AISs applied in these companies did not provide useful information for selecting relevant discount rates to use in the evaluation process of investment projects. Some of these companies had not a relevant index or indices, either for documents cycle (24% of the sample companies) or accounts (11% of the sample companies). In addition, the majority of the sample companies did not have a department for development and research (62%), and consequently there was no link between information systems, including AIS, within these companies. Most of these companies (52%) only had financial feasibility studies of their projects made by external specialists, instead of carrying out comprehensive feasibility studies internally. Moreover, some of these companies (27%) depended on intuition, subjectivity and experience in evaluating their investment projects instead of using current methods in the evaluation process, because there was no prediction for cash flows in most companies (64%), as shown in the following table: Research Memorandum 30 The University of Hull Business School 20

Table 17 Cross-tabulation of AISs Applied and the Sources of the Shortcomings in These Systems Fully Manual Computerised, Row Total either Partially or Fully Only Intuition 09 37.5% 17 23.3% 26 6.8% Figures, Analysis and Intuition 08 33.3% 23 31.5% 31 32.0% Only Figures and Analysis 08 29.2% 33 45.2% 40 41.2% There is no Response 09 37.5% 08 11.0% 17 17.5% By External Specialist 10 41.7% 40 54.8% 50 51.5% Within the Company 05 20.8% 25 34.2% 30 30.9% Non-prediction 17 70.8% 45 61.6% 62 63.9% Prediction 07 29.2% 28 38.4% 35 36.1% There Is No Discount Rates 14 58.3% 41 56.2% 55 56.7% Irrelevant Discount Rates 05 20.8% 17 23.3% 22 22.7% Relevant Discount Rates 05 20.8% 15 20.5% 20 20.6% There Is No Response 04 16.7% 03 04.1% 07 07.2% Database Only 15 62.5% 11 15.1% 26 26.8% Database and Feedback 05 20.8% 59 80.0% 64 66.0% ± There Is No Response 04 16.7% 02 02.7% 06 06.2% Relevant Index for 03 15.5% 08 11.0% 11 11.3% Documents Cycle Only Digital Index for Accounts Only 05 20.8% 18 24.7% 23 23.7% Both of Them 12 50.0% 45 61.6% 57 58.8% Not Existed Department for Research & Development 19 79.2% 41 56.2% 60 61.9% Existed Department for 05 20.8% 32 43.8% 37 38.1% Research & Development Column Total 24 24.3% 73 75.7% 97 100% The results of the chi-square indicate that there is no statistically significant association between the type of AISs applied in the sample companies, and dependence on intuition or figures and analysis in the process of investment decisionmaking, prediction of cash flows, using relevant discount rates, the existence of an index for documents cycle and a digital index for accounts. Thus, this implies that using intuition or figures and analysis by decision-makers in the sample companies did not depend on the type of the AISs applied. This means that intuition played a role in the investment decision-making process because information provided by the AISs applied in the sample companies was incomplete or inaccurate, as the interviewees said. This confirms that, regardless of type, the AISs applied in most of the sample companies could not provide decision-makers with required information for predicting reliable cash flows for the process of evaluating investment projects. This means, also, that the existence of indices for documents cycle and accounts depended on the type of ownership rather than the type of AISs applied. On the other hand, there is a statistically significant association between the type of AISs applied in the sample companies, and carrying out feasibility studies, the existence of a database and a feedback system, and the existence of a department for research and development. This reflects that carrying out feasibility studies in the sample companies, the existence of a database and a feedback system, and the Research Memorandum 30 The University of Hull Business School 21

existence of a department for research and development depends on the type of AISs applied. The chi-square values and the P-values are shown in Table18. Table 18 Chi-square and the Correlation Coefficient of the Applied AISs and the Sources of the Shortcomings Sources of Shortcomings Chi-square (χ 2 ) Correlation Coefficient Value Significance Value Significance Depending on Intuition or 2.50668.28555.16026.11687 Figures and Analysis Performing Feasibility Study 8.91436.01160.24143.01720 The Prediction of Cash Flows.66135.41608.08257.42136 The Use of Discount Rates.06367.96867.01338.89653 The Existence of Database and 28.95760.00000.53802.00000 Feedback System ± The Existence of Index for 6.22958.10096.14761.14905 Documents and Accounts The Existence of department for research and development 4.05037.04416.20434.04468 In addition, the correlation between the type of AISs applied in the sample companies and dependence on intuition or figures and analysis in the process of investment decision-making, prediction of cash flows, using relevant discount rates, the existence of an index for documents cycle and a digital index for accounts was positive but it is very week. On the other hand, the correlation between the type of AISs applied in the sample companies and carrying out feasibility studies, the existence of a database and a feedback system, and the existence of a department for research and development was positive but it is not strong, as shown in Table 18. This reflects that the AISs applied in the sample companies did not facilitate the conduct of a comprehensive feasibility study within the company. This means that the type of AISs applied determines somewhat the quality of the available information for the process of investment decision-making. Therefore, AISs in these companies should be developed to provide decision-makers with the required information for evaluating their investment projects by using the current methods of evaluating investment projects within their companies instead of depending on external specialists. This requires improvement of the applied AISs in these companies by updating databases, improving feedback systems, depending on the latest IT, using modern applications software in the field of AISs and so on. On the other hand, it can be seen that most of these companies were trying to use modern technology. So, these companies should use current methods in evaluating their investment projects to determine their feasibility. This requires development of the AISs applied in these companies to be more advanced. 11. PRESENTING AND ANALYSING THE MAIN INTERVIEWS FINDINGS Frequency distributions and qualitative analysis are used to describe interviewees and the discussion with them, as follows: 11.1. General Information From Table 19, it can be seen that all interviewees have got a Bachelor s degree in commerce, especially in accounting, and some of them have got higher Research Memorandum 30 The University of Hull Business School 22

diplomas in the field of accounting, business and finance (16 persons, representing 29%). This means that all interviewees worked in the field of AIS and they might be expected to be knowledgeable about the study topic, through their experience in this field. Table 19 General Information about Interviewees Value Label Financial and Managing Directors Engineering & Electrical Industries Chemicals & Pharmaceutica ls Industries Building Materials Industries Managerial Accountants Persons No. % Minimum Qualificatio ns Companies No. % 14 7 21 38% B.Com. 9 36% 13 5 18 32% B.Com. 8 32% 13 4 17 30% B.Com. 8 32% Total 40 16 56 100% 25 100% 11.2. The Dimensions of AISs in Manufacturing Companies in Egypt In personal interviews with financial directors and management accountants in manufacturing companies in Egypt (25 companies), the researcher noticed that the contents of AISs in these companies included: The Human Element: This element is one of the most important components of AISs in these companies. This element includes accountants, financial directors and managerial directors generally; Some equipment necessary for a computer system, because most of these companies have semi-computerised systems. In addition, some companies still depended on the manual system because there was not enough financial support and expertise to establish computerised systems. This result is also confirmed by questionnaire findings; Some programs for operation and for application, but these programs were oldfashioned, because replacing them was considered too expensive; Database according to the requirements of the Uniform Accounting System in public sector companies, and according to the Financial Accounting System in private sector companies. Moreover, the role of AISs in these companies involved: The traditional role of accounting (recording and classifying transactions, and preparing an income statement and a balance sheet); Help in making routine decisions and monitoring performance; Help, partially, in investment decision-making process in some companies; Help in preparing payroll, pricing and meeting external regulatory and legal reporting requirements. The researcher noticed that the AISs applied in most manufacturing companies surveyed (9 companies, representing 36%) could not provide useful information to investment decision-makers, although they could provide relevant information for other decisions, because there was no advanced database. In addition, there were no relevant index for documents or digital index for accounts, especially in the private sector, and there were some qualitative data that were difficult to convert into quantitative data. This situation can be attributed to the lack of awareness of Research Memorandum 30 The University of Hull Business School 23

accountants in these companies of the requirements of usefulness, and inadequate expertise in this field. In addition, accountants as providers of information, sometimes, did not know enough about decision-makers in order to produce useful information to meet their requirements. This result is also confirmed by questionnaire findings. In addition, the researcher noticed that there was a lack of understanding of management accounting systems and the task of the management accountant; indeed these terms (management accounting system and management accountant) were not familiar in most of the sample companies (16 companies, representing 64%). In addition, most accountants in these companies tended to do routine tasks and there was no attempt at innovation, especially in the public sector. Moreover, the AISs in most manufacturing companies (14 companies, representing 56%) focused on data gathering and processing and provided very little support for the more implicit knowledge creation process which decision-makers require. In addition, databases were not updated regularly, due to lack of updating of hardware and software, which would cost manufacturing companies a lot, and lack of knowledge of computers in general. This situation can be attributed to the lack of finance and the required qualifications. This finding is confirmed by the responses to the questionnaire as well. Accordingly, most of the sample companies (14 companies, representing 56%) did not have comprehensive AISs. Consequently, decision-makers in these companies faced some difficulty in the decision-making process because the required information was incomplete and sometimes inaccurate. Hence, decision-makers in these companies depended on intuition in the decision-making process. This result, also, is confirmed by findings from the questionnaire. It is worth noting that the researcher found out that measuring the usefulness of accounting information in manufacturing companies in Egypt (according to the sample companies) was not easy because there were no clear and specific standards for this process. In addition, the characteristics of accounting information may differ, according to the different points of view of stakeholder groups (the point of view of technical staff and the point of view of the users of accounting information). In addition, the majority of the sample companies depended on AIS and other information sources, either internal or external, in providing decision-makers with the information required to evaluate their investment projects (16 companies, representing 64%), as shown in Table 20. This means that AISs in these companies were unable to provide decision-makers with the required information to evaluate the investment projects as the main information systems. Table 20 The Source of Information for Evaluating Investment Projects Value Label Value Frequency Percentage AISs Only 1.00 6 24% Other Information Systems Only 2.00 3 21% Both of Them 3.00 16 64% Total 25 100% 11.3. The Dimensions of the Process of Evaluating Investment Projects in Manufacturing Companies in Egypt The process of evaluating investment projects was regarded as important in most companies sampled (21 companies, representing 84%), but as not important in a few companies (4 companies, representing 16%), as shown in Table 21. It seems that some companies were not interested in evaluating their investment projects, apart Research Memorandum 30 The University of Hull Business School 24

from doing financial analysis, because they considered that it is unnecessary to carry out comprehensive feasibility studies, and because this process is expensive. Most of these companies only (52%) conducted financial feasibility studies of their investment projects (especially in the public sector) instead of carrying out a comprehensive feasibility study including marketing feasibility, technical feasibility, financial feasibility, economic feasibility and social feasibility. Table 21 The Importance of the Process of Evaluating Investment Projects Value Label Value Frequency Percentage Important 1.00 21 84% Not Important 2.00 4 16% Total 25 100% Great importance was attached to the process of evaluating investment projects is great in most of the sample companies (84%), but there were some problems faced by decision-makers in these companies in carrying out this process. They included the following: The level of reliance of manufacturing companies in Egypt on computers for providing useful information for the investment decision-making process was low, because computerised systems were expensive. In addition, there was no advanced database in most companies because of lack of regular updating. So, the information available for the decision-making process was sometimes incomplete and/or inaccurate. This means that decision-makers did not make decisions on the basis of orderly rational analysis but depended on intuition and judgement. The decision-makers in most of the sample companies (15 companies, representing 60%) claimed that they had in their memory a vast store of knowledge gained from training and experience, and they depended on this knowledge in the decisionmaking process. This result is confirmed by the findings of the questionnaire. There was no special expertise in investment decision-making because of the lack of qualifications in this field. Because performing a feasibility study was expensive and resources were limited, so most manufacturing companies did not make comprehensive feasibility studies. Much bureaucracy and long procedures were required to establish a new project. Strategic IDs in SOEs are governed by economic, social and political factors. There was no freedom in making strategic investment decisions, because these decisions were subject to the economic and social development plan. It is the Prime Minister and/or the Minister for Industry who were responsible for making these decisions. In addition, there were several factors that affected investment decisionmaking in manufacturing companies in Egypt (according to the sample companies), as follows: Most IDs in these companies were made under various degrees of risk and uncertainty. In addition, the investment decision-making process was accomplished on a subjective basis depending on the experience of decisionmakers. Some of these companies suffered (9 companies, representing 36%) from a lack of capital for investment, and/or failure to make optimum use of their resources to the best use. This was due to lack of planning, control and monitoring in their investment programmes, because of a lack of useful information and techniques. Research Memorandum 30 The University of Hull Business School 25

There were some external constraints imposed by the Egyptian government to serve national objectives, especially social objectives; for example, setting the prices of some products (especially pharmaceutical products). In some companies (5 companies, representing 20%), management accountants and/or financial directors did not participate in the decision-making process because the company s manager had sole responsibility for this and investment decision-making was a centralised process. In other words, the head of management in most of the sampled companies was responsible for doing feasibility studies. In addition, most of these companies (52%) depended on external specialists for performing feasibility studies. The researcher noticed that most of the sample companies (17 companies, representing 68%) used two financial appraisal techniques or fewer, especially ARR, two risk analysis techniques or fewer, and two or more non-financial indicators (depending on subjective judgement and experience) for evaluating their investment projects. These criteria were not used in the early stages of studying and analysing an investment project because of other factors that affected the evaluation process, such as the political and social dimensions, especially in the public sector companies. Some manufacturing companies in Egypt (6 companies, representing 24%) did not use risk analysis techniques because it is not easy to use these methods and/or there is no time to use these methods. Decision-makers in these manufacturing companies in Egypt depended on their experience to measure risks for their investment projects. The researcher also noticed that decision-makers in most of the companies sampled (15 companies, representing 60%) depended on intuition and judgement according to their experience, especially when the company faced increasing uncertainty, and the role of scientific methods of evaluating investment projects decreased in such cases. The researcher also noticed that some of these companies (6 companies, representing 24%) participated in local conferences (related to the field of investment decision-making and doing feasibility studies) only, because international conferences would cost the company a great deal. Furthermore, co-operation and co-ordination took place between manufacturing companies in Egypt and other sectors, such as the General Authority for Investment and Ministry of Industry, in evaluation of investment projects. 11.4. The Relationship between the Applied AISs and The Process of Evaluating Investment Projects in Manufacturing Companies in Egypt According to personal interviews with financial directors and/or management accountants in some manufacturing companies in Egypt, the researcher noticed that AISs helped partially in the process of evaluating investment projects in some manufacturing companies in Egypt (6 companies, representing 24%). There are some activities that are related to AIS that supported the process of evaluating investment projects in manufacturing companies in Egypt, such as recording transactions and preparing financial statements and reports that related to investment projects. The level of participation of management accountants and/or financial directors in decision-making and doing feasibility studies was low in some companies (5 companies, representing 20%), because these processes were excluded from their tasks in these companies (this result is confirmed by the findings of the questionnaire). In addition, there were no training courses in the field of the role of AIS in evaluating investment projects in most of these companies (19 companies, Research Memorandum 30 The University of Hull Business School 26

representing 76%). Moreover, there was no link between theory and practice in the field of the role of AIS in evaluating investment projects in manufacturing companies. Some managerial accountants and/or financial directors had done higher studies, but they did not make a link between their studying and their jobs. Furthermore, some decision-makers and/or providers of information in the sample companies had no idea or had only a little knowledge about how to use investment appraisal techniques. Hence, it can be concluded that there is a gap between theory and practice in the area of investment decision-making processes, and the role of AISs in manufacturing companies in this field in Egypt. 11.5. Other Matters According to personal interviews with financial directors and management accountants in manufacturing companies in Egypt, the researcher noticed that decision-makers in manufacturing companies in Egypt should have the following qualifications: Decision-makers should have a higher degree in education, especially in accounting, business and finance. Decision-makers should have good and long experience in this field. Decision-makers should be in top management for IDs or in middle management, at least, for other decisions. Also, the researcher noticed that there is a relationship between the process of privatisation in Egypt and evaluating projects in the privatised companies in order to re-evaluate current projects and evaluate new projects, to determine which are successful. This relationship related to the role of the AISs applied in the privatised companies in providing decision-makers with useful information to rationalise their decisions. However, this relationship is not strong as a result of the shortcomings in the AISs applied in these companies. Furthermore, the researcher noticed that there is a relationship between privatisation methods and opening new fields of investment in Egypt for both domestic and foreign investors, especially for selling to foreign investors. This method led to the transfer of new technology to Egypt and to opening new fields of investment. These investments should be evaluated by using financial, non-financial and risk analysis techniques. In addition, the Egyptian government encourages the private sector to participate in the privatisation process as buyers or as evaluators. This will encourage people to increase their savings, and consequently their investments in Egypt on the one hand, and to acquire knowledge and experience in the field of evaluating projects on the other hand. 12. TESTING THE STUDY HYPOTHESIS As was mentioned in this paper, the hypothesis of this study is: the shortcomings of the AISs applied in the manufacturing companies in Egypt lead to a low degree of reliance on the current methods of evaluating investment projects to evaluate their investment projects. According to the findings reported, there is a low degree of reliance on financial appraisal techniques in evaluating the investment projects. There is a moderate degree of reliance on non-financial indicators in evaluating the investment projects in general and few companies always employ them. There is a low degree of reliance on risk analysis techniques. These findings are due to the shortcomings in the AISs applied in manufacturing companies in Egypt (judging by the sample companies). These Research Memorandum 30 The University of Hull Business School 27

shortcomings include there being no feedback system (27%), index for documents (24%) or digital index for accounts (11%), prediction of cash flows (64%), or the usage of relevant discount rates (23%) in some companies. In addition, accounting information in some manufacturing companies (14 companies, representing 56%) was incomplete or inaccurate, because there were no comprehensive AISs. Therefore, intuition and judgement played a role in the process of investment decision-making (27%). So, decision-makers could not determine accurately the maximum required payback period and the minimum required rate of return, for example, as acceptance/rejection criteria. Moreover, there were no specialists in performing feasibility studies in these companies, so most of them depended on external specialists to carry out such studies (52%). In addition, there was no department for research and development in most of these companies (62%) to support the process of investment decision-making, and consequently there was no link between information systems, including AISs, within these companies. In addition, there was a lack of understanding of managerial accounting systems and the task of the managerial accountant and there were no training programmes in the field of the role of AISs in rationalising investment decisions. Moreover, databases were not updated regularly, due to the lack of updating hardware and software, which would be very expensive for manufacturing companies. Furthermore, some decision-makers and/or providers of accounting information in manufacturing companies in Egypt had no idea of, or had only a little knowledge about, how to use some of the current methods of evaluating investment projects. Moreover, a statistically significant association was found between the type of AIS applied in the sample companies and the use of some methods such as ARR, keeping up with competition and customer satisfaction. In addition, a statistically significant association was found between the type of AIS applied in the sample companies and performing feasibility studies, the existence of databases and feedback systems, and the existence of department for research and development. In addition, there is no correlation between the type of AISs applied in the sample companies and the use financial appraisal techniques and risk analysis techniques in evaluating their investment projects. In addition, there is a correlation between the type of AISs applied in the sample companies and the use non-financial indicators, but it is not strong. Accordingly, the research hypothesis is supported. So, the shortcomings of the AISs applied in the manufacturing companies in Egypt led to a low degree of reliance on current methods of evaluating investment projects using financial, nonfinancial or risk analysis techniques. Therefore, accountants in manufacturing companies in Egypt need to understand modern organisation systems in order to develop the AISs applied in their companies to meet the needs of investment decision-making processes and the challenges of the future. Thus, they should expand their knowledge beyond traditional accounting subject matters and make a link between theory and practice for supporting the process of investment decision-making. 13. A PROPOSED ROLE FOR AISs IN MANUFACTURING COMPANIES IN EGYPT In the light of developments and events of modern organisation systems, AISs in manufacturing companies in Egypt need some development to be more advanced in order to provide decision-makers with useful information for supporting them in the process of decision-making at all levels. The development of AISs is very important Research Memorandum 30 The University of Hull Business School 28

to manufacturing companies because these companies will have to live with these systems for a long time and these systems will affect the future of these companies. Therefore, these systems must provide useful information to help in planning, control, performance measurement, and the decision-making process at all levels, especially under globalisation, liberalisation in trade and evolution in IT. The managerial accounting system is considered the best system for the investment decision-making process in manufacturing companies in Egypt. So, accountants in these companies should depend mainly on this system for the investment decision-making process, without ignoring other systems. The components of the AIS in manufacturing companies in Egypt must include specific elements. The nature of these components will tend to vary, depending on the degree of automation incorporated into AIS, the nature of required data, the nature of activity within the company, the purpose of this system and so on. In general, these components should include: A. The Human Element: This element should include principally financial directors and accountants besides other people, like specialists in computer science, statistics, law, feasibility studies and so on. B. Hardware Variables: This element should include mainly files for documents with a relevant index for documents cycles, accounting books and registers, the accounting manual with digital index for accounts, and computers. C. Software Variables: This element should include software, either for systems or operation, for managerial accounting systems or for other systems. F. Database: This element should include all the necessary data for meeting the users needs. The database is considered very important because it is a central source of information within the manufacturing company, and the effectiveness of the AIS depends on the value of the information held within the database, as an accounting product. It is necessary to update the database regularly. In addition, useful systems for monitoring and feedback, a department for research and development, and regular updating of databases should be undertaken. Manufacturing companies in Egypt should organise training programmes for the providers of accounting information in the field of investment decision-making. To cope with evaluating investment projects in manufacturing companies in Egypt, the AISs in these companies must be capable of: determining the costs and benefits of investment projects; forecasting the expected cash flows from investment projects, whether inflows or outflows, during the useful life of these projects; determining the appropriate cost of capital at which to discount the cash flows; determining the present value of the expected cash flows to evaluate investment projects and analysing the investment risk by using current methods; providing enough information to use non-financial indicators in evaluating investment projects. Moreover, it is necessary to prepare investment decision-making guidelines. Manuals for this purpose should cover the following aspects: Instructions and advice regarding the completion and submission of standard project approval documents; How to determine the costs and benefits of the investment project and how to forecast the expected cash flows of it; How to use methods of evaluating investment projects, either financial, nonfinancial risk analysis techniques. Target rates of return to be applied to different types of projects; Research Memorandum 30 The University of Hull Business School 29

How to determine the appropriate required payback period. How to identify and evaluate non-financial effects and/or intangible benefits. Instructions about the application of the changes in price levels. AISs in manufacturing companies in Egypt must provide decision-makers with useful information for supporting them in planning, control, performance measurement, and decision-making at all levels. Therefore, accountants should have: Understanding of IT, especially computer and communication technology, such as the Internet, Electronic Mail and so on, to expand their skills and knowledge to meet the needs of the decision-making process; Understanding of modern applications software and attending training programmes in the field of investment decision-making to rationalise the decision-making process; An awareness of the company s shares in the stock market and how the stock market works, to have a knowledge of the relationship between the prices of their companies shares and the shape and volume of accounting disclosure regarding their companies; An awareness of constructing and developing AISs, especially under modern organisation systems in order to update these systems from time to time in order to meet the challenges of new systems and to help in the formulation of company s strategy; Understanding of the fundamentals of the decision-making process to provide decision-makers with useful information and maximise the value of accounting information; An awareness of the methods of evaluating investment projects and of analysing investment risk, and how to use these methods for evaluating their investment projects and rationalising related decisions; An awareness of modern quantitative methods, operation research methods and statistical methods and how to use these methods with computers, such as how to use EXCEL, to expand their skills and knowledge for supporting the quality of accounting information; An awareness of the behavioural dimension of the decision-making process and decision-maker s needs and the ways in which these needs should be met to provide them with required information. This requires study of the psychological impact of human information processing and actual decision behaviour; An awareness of the breadth of information used by decision-makers, especially within manufacturing companies to construct the appropriate information system and attain the optimal exploitation of the available resources; Up-to-date knowledge and skills acquired through reading professional magazines, attending selective professional development programmes and participating in conferences related to their domains to put themselves on the correct path under globalisation and the challenges of the 21 st century; Ability to understand and investigate the main security threats that challenge AISs within their companies and how to implement adequate safeguards to protect these systems against prospective security risks. In addition, for developing AISs in manufacturing companies in Egypt, it is necessary to use advanced hardware, advanced software, modern applications and an advanced database. Moreover, it is necessary to link theory and practice in the field of AISs and their roles, especially their role in rationalising IDs, for attaining the Research Memorandum 30 The University of Hull Business School 30

optimum exploitation of the available resources and achieving their targets. So, there has to be a link between AISs and other information systems, such as MIS, within manufacturing companies in order to provide decision-makers with useful information. In addition, there has to be a link between the company s overall information system and other systems within the company, such as executive support systems, expert systems, and DSS to support the decision-making process. On the other hand, there has to be co-operation between accountants and other people, especially decision-makers, within manufacturing companies to meet the needs of accounting information users.. Under globalisation, trade liberalisation, technological changes, competition, new philosophies (world class manufacturing philosophies such as Just in Time and Total Quality Management) and so on, accountants skills should be expanded to meet the challenges and requirements of the new century in the field of accounting, business and finance, especially their roles in the investment decision-making process. 14. CONCLUSION This paper has stated the role of accounting information systems in rationalising investment decisions in manufacturing companies in Egypt. It began by presenting background regarding evaluation methods of investment projects in manufacturing companies. Then, it explained the general framework of the study, the research problem, its hypothesis, its questions, its objectives, its importance, its design, and its methodology. Then it presented and discussed the main findings of the survey, and tested the research hypothesis as well. Finally, the researcher attempted to outline the proposed role of AISs in manufacturing companies in Egypt. The AISs applied in most manufacturing companies in Egypt (according to the sample companies) helped, to some extent, in the process of investment decisionmaking in some companies, but they could not provide useful information to investment decision-makers (even though they could provide relevant information for other decisions). This situation was a consequence of the lack of awareness on the part of accountants in these companies of the requirements of relevance and reliability, and their inadequate qualifications in this field. Moreover, there was a lack of understanding of management accounting systems and the task of management accountants, because these terms (management accounting system and management accountant) were not familiar to most of the sample companies. In addition, there was a tendency for accountants in manufacturing companies in Egypt to do routine tasks and there was no effort towards or attempt at innovation. In addition, AISs in most manufacturing companies in Egypt focused on data gathering and processing, and provide very little support for the more implicit knowledge-creation process which decision-makers require. In addition, database, hardware and software were not regularly updated, because of cost constraints. Accordingly, most manufacturing companies in Egypt (according to the sample companies) did not have comprehensive AISs. In consequence, decisionmakers in these companies faced some difficulties in the process of decision-making, because the information that they need was incomplete and sometimes inaccurate. Hence, decision-makers in some companies depended on intuition in decisionmaking. Accordingly, these shortcomings in the AISs applied in the manufacturing companies in Egypt led to a low degree of reliance on current methods of evaluating investment projects. This is due to the link between the applied AIS in the Research Memorandum 30 The University of Hull Business School 31

manufacturing companies in Egypt (according to the sample companies) and the use of current methods of evaluating investment projects being weak. Therefore, AISs in manufacturing companies in Egypt could play a vital role in providing decision-makers with useful information in the investment decisionmaking process. Therefore, these systems should be developed as described in this paper. In addition, accountants in manufacturing companies in Egypt need to understand modern organisation systems in order to develop AISs to meet the needs of the investment decision-making process and the challenges of coming periods. Thus, they should expand their knowledge beyond traditional accounting subject matters and relate theory to practice for supporting the process of investment decision-making. This can be done by studying IT, such as the Internet and Electronic Mail, attending training courses in SPSS and EXCEL, for example, and participating in conferences on the role of AISs in rationalising IDs. References: Abd Allah, Mohey Mahmoud (1992), Evaluating Accounting Data to Rationalise Investment Decisions: An Empirical Study, M.Sc. Thesis, Helwan University. Abdel-Kader, M. G. & Dugdale, D. (1998), Investment in Advanced Manufacturing Technology: A Study of Practice in Large U.K. Companies, Management Accounting Research, Vol. 9, No. 3, pp. 261-284. Ansoff, H. Igor (1988), The New Corporate Strategy, New York: John Wiley & Sons. Bierman, Harold & Smidt, Seymour (1990), The Capital Budgeting Decision: Economic Analysis of Investment Projects, London: Collier-Macmillan. Brealey, Richard A. & Myers, Stewart C. (1996), Principles of Corporate Finance, New York: The McGraw-Hill Companies, Inc. Briston, Richard J. (1983), Introduction to Accountancy and Finance, London: Macmillan Press. Chan, Felix T. S. (1996), Decision Making on Investment Evaluation and Implementation of Advanced Manufacturing Technology, International Journal of Computer Applications in Technology, Vol. 9, No. 2-3, pp. 114-118. El-Tohamy, Abd El-Moneam Ahmed (1992), Financial Management, Cairo: Ean Shams Office. FASB (1998/99), Statement of Financial Accounting Concepts: Accounting Standards, Con 2, New York: John Wiley & Sons, Inc., pp. 33-81. Garrison, Ray H. & Noreen, Eric W. (2000), Managerial Accounting, Boston: The McGraw-Hill Companies, Inc. Guedes, Maria Do Comro Vaz De Miranda (1988), Mathematical Models in Capital Investment Appraisal, Ph.D. thesis, Warwick University. Hamilton, Kirk & Clemens, Michael (1999), Genuine Savings Rates in Developing Countries, The World Bank Economic Review, Vol. 13, No. 2, pp. 333-356. Hong, Xiaojing (1992), Capital Budgeting Theory: Is It Relevant?, Master s Dissertation, The University of Hull. Horngren, Charles T., Foster, George & Datar, Srikant M. (2000), Cost Accounting: A Managerial Emphasis, London: Prentice-Hall International, Inc. Research Memorandum 30 The University of Hull Business School 32

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