The Financial Manager and Quantitative Decision Models

Abstract

During the past decade, the literature in finance has dealt with quantitative analysis as a tool for the financial manager. Particular emphasis has been placed upon models that were analytically consistent and that dealt with problems which seemed significant in the theory of finance. For example, many papers provide a conceptual framework for measuring risk and giving recognition to the decision maker's propensity to assume risk. In spite of the interest in quantitative analysis shown in the literature, it is not obvious that the interest has a parallel in corporate practice. Questions remain as to the extent to which these models are used and the experience of corporations with theory when they are used. The objective of this paper is to examine these questions.