Strategic Financial Management in the Era of Globalization: The Role of Capital Budgeting in Multinational Corporations

This research considers the function of capital budgeting in multinational corporations (MNCs) that work across the globalized environment, particularly to highlight the influence of political risk, exchange rate fluctuation, and changes in regulations on investment. A quantitative approach was applied with a sample size of 236 Pakistani entrepreneurs and through a self-administered survey with a Likert scale to gather information. Data collection involved the use of multiple regression, correlation, and T-test techniques. The results showed that political risk, exchange rate volatility, and regulatory changes significantly impact capital budgeting decisions. In addition, the research set a stark difference between the practices of capital budgeting in MNCs in developed countries and developing countries. These results confirm that MNCs need to take a total approach to capital budgeting covering financial and non-financial risks. This research contributes to an understanding of strategic financial management with respect to globalization and offers worthwhile information for financial managers, policymakers, and future researchers involved in multinational investment decisions.