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Narratives in managers’ corporate finance decisions


  • The authors acknowledge financial support from the Accounting & Finance Association of Australia and New Zealand; and assistance from the Finance and Treasury Association in collecting data. We are very grateful to the impressive group of managers who generously gave their time and skill in completing the surveys and taking part in interviews. We appreciate insightful comments from numerous colleagues, especially Rob Brown, Stephen Brown, Kevin Davis and participants in research seminars at the University of Amsterdam and the University of Melbourne. We are also grateful for detailed comments from the Editor and two anonymous referees who significantly strengthened our argument and conclusions. The usual disclaimer applies.


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