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Real Option Exercise : Empirical Evidence
Décaire, Paul - 2019
We study when and why firms exercise real options. Using detailed project-level investment data, we find that the likelihood that a firm exercises a real option is strongly related to peer exercise behavior. Peer exercise decisions are as important in explaining exercise behavior as variables...
Persistent link: https://www.econbiz.de/10012479576
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The Effectiveness of Life-Preserving Investments in Times of COVID-19
van Binsbergen, Jules H. - 2020
We analyze the effectiveness of preventive investments aimed at increasing agents' life expectancy, with a focus on influenza and COVID-19 mitigation. Maximizing overall life expectancy requires allocating resources across hazards so as to equalize investments' marginal effectiveness. Based on...
Persistent link: https://www.econbiz.de/10012481577
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Real Options in a Dynamic Agency Model, with Applications to Financial Development, IPOs, and Business Risk
Philippon, Thomas - 2007
We study investment options in a dynamic agency model. Moral hazard creates an option to wait and agency conflicts affect the timing of investment. The model sheds light, theoretically and quantitatively, on the evolution of firms' dynamics, in particular the decline of the failure rate and the...
Persistent link: https://www.econbiz.de/10012465063
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Irreversible Investment, Real Options, and Competition : Evidence from Real Estate Development
Bulan, Laarni - 2006
We examine the extent to which uncertainty delays investment and the effect of competition on this relationship using a sample of 1,214 condominium developments in Vancouver, Canada built from 1979-1998. We find that increases in both idiosyncratic and systematic risk lead developers to delay...
Persistent link: https://www.econbiz.de/10012466179
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Investment Under Uncertainty and Time-Inconsistent Preferences
Grenadier, Steven R. - 2006
The real options framework has been used extensively to analyze the timing of investment under uncertainty. While standard real options models assume that agents possess a constant rate of time preference, there is substantial evidence that agents are very impatient about choices in the...
Persistent link: https://www.econbiz.de/10012466627
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Investment Timing, Agency, and Information
Grenadier, Steven R. - 2005
This paper provides a model of investment timing by managers in a decentralized firm in the presence of agency conflicts and information asymmetries. When investment decisions are delegated to managers, contracts must be designed to provide incentives for managers to both extend effort and...
Persistent link: https://www.econbiz.de/10012467537
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R&D Investments with Competitive Interactions
Miltersen, Kristian R. - 2004
In this article we develop a model to analyze patent-protected R&D investment projects when there is (imperfect) competition in the development and marketing of the resulting product. The competitive interactions that occur substantially complicate the solution of the problem since the decision...
Persistent link: https://www.econbiz.de/10012468435
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Real Options With Uncertain Maturity and Competition
Miltersen, Kristian R. - 2007
We develop a new approach to dealing with real options problems with uncertain maturity. This type of situation is typical for R&D investments and mine or oil exploration projects. These types of projects are characterized by significant on-going investment costs until completion. Since time to...
Persistent link: https://www.econbiz.de/10012465666
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R & D Activities and the Technology Game : A Dynamic Model of U.S.-JapanCompetition
Sato, Ryuzo - 1984
that Japan is not spending much on basic technology development cannot be empirically substantiated from the study of the … technology.The second part of the paper is to show how two countries, one with heavy R&D activities in basic technology (the U ….S.A.)and the other with heavy R&D activities in applied technology(Japan), can compete in the world market with their productivity …
Persistent link: https://www.econbiz.de/10012477573
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American Disclosure Options
Back, Kerry E.; Carlin, Bruce Ian; Kazempour, Seyed Mohammad - National Bureau of Economic Research - 2023
We study strategic disclosure timing by correlated firms in the presence of risk-averse investors. Firms delay disclosures in the hope that positively correlated firms will announce especially good news and lift their own price. Risk premia rise before disclosures, drop when disclosures occur,...
Persistent link: https://www.econbiz.de/10014447256