II. Sample Selection Process
The interpretation of survey data presents some limitations as discussed in
Aggarwal (1980). While the survey was mailed to the CFO, the responses were the
opinion of one individual and thus may not fully reflect the firm’s position. It is possible
this person may not be the best to assess the capital budgeting process if he/she is far
removed from capital management. There is also potential concern about a non-response
bias. In an attempt to limit this limitation, two personalized mailings were sent six weeks
apart. While the survey technique is not without flaws, it has been generally accepted as
a reasonable proxy given the time and personal constraints in large corporations.
A two-page questionnaire was mailed to the Chief Financial Officers (CFO’s) of
each of the Fortune 1000 companies. In an attempt to increase the response rate, each
letter was personalized and signed. Furthermore, we mailed a copy of the results to
interested respondents. Each survey was coded to avoid duplication in a second mailing.Ten surveys were returned as undeliverable and thirty-two firms indicated they
did not respond to mail surveys. Two hundred and five usable responses were received,
for a response rate of 20.5%, which is comparable to similar surveys.4
One hundred
twenty responses were received from the first mailing and eighty-five from the second
mailing.