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Journal articles on the topic 'Theory of real options'

Author: Grafiati

Published: 4 June 2021

Last updated: 13 February 2022

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1

Deffains, Bruno, and Marie Obidzinski. "Real Options Theory for Law Makers." Recherches économiques de Louvain 75, no. 1 (2009): 93. http://dx.doi.org/10.3917/rel.751.0093.

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2

Posen, Hart E., Michael J. Leiblein, and John S. Chen. "A Behavioral Theory of Real Options." Academy of Management Proceedings 2016, no. 1 (2016): 12346. http://dx.doi.org/10.5465/ambpp.2016.12346abstract.

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3

Chi, Tailan, Jing Li, Lenos G. Trigeorgis, and Andrianos E. Tsekrekos. "Real options theory in international business." Journal of International Business Studies 50, no. 4 (2019): 525–53. http://dx.doi.org/10.1057/s41267-019-00222-y.

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4

Trigeorgis, Lenos, and Jeffrey J. Reuer. "Real options theory in strategic management." Strategic Management Journal 38, no. 1 (2016): 42–63. http://dx.doi.org/10.1002/smj.2593.

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5

Sanchez, Ron. "Integrating transaction costs theory and real options theory." Managerial and Decision Economics 24, no. 4 (2003): 267–82. http://dx.doi.org/10.1002/mde.1124.

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6

Grenadier, Steven R. "OPTION EXERCISE GAMES: THE INTERSECTION OF REAL OPTIONS AND GAME THEORY." Journal of Applied Corporate Finance 13, no. 2 (2000): 99–107. http://dx.doi.org/10.1111/j.1745-6622.2000.tb00057.x.

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7

Hajdini, Ilir, and Josef Windsperger. "Real options in franchise contracting: an application of transaction cost and real options theory." European Journal of Law and Economics 50, no. 2 (2020): 313–37. http://dx.doi.org/10.1007/s10657-020-09665-3.

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Abstract Previous research has not explained the use of real option clause in franchise contracting. The real option clause has two economic functions: To reduce transaction costs by mitigating opportunism risk and to increase strategic rents by exploiting the profit potential from future upside opportunities under uncertainty. We argue that franchisors will more likely use a real option clause (ROC) in franchise contracts under high behavioral uncertainty, high franchisors’ transaction-specific investments relative to franchisees’ and long contract duration. In addition, by combining transact

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8

Morreale, Azzurra, Luigi Mittone, Thi-Thanh-Tam Vu, and Mikael Collan. "To Wait or Not to Wait? Use of the Flexibility to Postpone Investment Decisions in Theory and in Practice." Sustainability 12, no. 8 (2020): 3451. http://dx.doi.org/10.3390/su12083451.

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Business sustainability and real options are closely connected, as real options are managerial flexibility that allows organizations to adapt to changes in their environment, thus making the organization more robust and economically sustainable. Studies in real options theory abound, yet there is still a lack of evidence on whether people make decisions consistently with the predictions made by real options models. We run a laboratory experiment to study the role of option value and the laboratory time required to resolve uncertainty in individuals’ decision to price and adopt an option to wai

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9

Wang, Qian, Keith W. Hipel, and D. Marc Kilgour. "Fuzzy Real Options in Brownfield Redevelopment Evaluation." Journal of Applied Mathematics and Decision Sciences 2009 (June 24, 2009): 1–16. http://dx.doi.org/10.1155/2009/817137.

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Real options modeling, which extends the ability of option pricing models to evaluate real assets, can be used to evaluate risky projects because of its capacity to handle uncertainties. This research utilizes possibility theory to represent private risks of a project, which are not reflected in the market and hence are not fully evaluated by standard option pricing models. Using a transformation method, these private risks can be represented as fuzzy variables and then priced with a fuzzy real options model. This principle is demonstrated by valuing a brownfield redevelopment project using a

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10

Rocha, Milena De Cássia, Márcio Augusto Gonçalves, and Yuri Lawryshyn. "Evolution of studies on Real Options Theory in health sector." Revista Gestão & Tecnologia 20, no. 4 (2020): 227–44. http://dx.doi.org/10.20397/2177-6652/2020.v20i4.1990.

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Objective: The objective of this study was to identify the evolution of studies of real options theory in the health sector. For that, the present paper presents a study, which aims to analyze the studies published on the main scientific bases.Methodology/approach – A bibliometric study was developed. Articles published in: Plubmed, Wiley Online Library, Sage, Web of Science, Science Direct, Springer Link and Emerald Insight were analyzed. Data were analyzed using descriptive statisticsOriginality / Relevance: The originality and relevance is to present an analysis on the evolution of the stud

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11

Ullrich, Christian. "Valuation of IT Investments Using Real Options Theory." Business & Information Systems Engineering 5, no. 5 (2013): 331–41. http://dx.doi.org/10.1007/s12599-013-0286-0.

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12

Chi, Tailan, Jing Li, Lenos G. Trigeorgis, and Andrianos E. Tsekrekos. "Correction to: Real options theory in international business." Journal of International Business Studies 50, no. 4 (2019): 554. http://dx.doi.org/10.1057/s41267-019-00227-7.

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13

Li, Xiaotong, and John D. Johnson. "Evaluate IT Investment Opportunities Using Real Options Theory." Information Resources Management Journal 15, no. 3 (2002): 32–47. http://dx.doi.org/10.4018/irmj.2002070103.

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14

Hackett, Sean M., and David M. Dilts. "A Real Options-Driven Theory of Business Incubation." Journal of Technology Transfer 29, no. 1 (2004): 41–54. http://dx.doi.org/10.1023/b:jott.0000011180.19370.36.

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15

Dimpfel, Marcus, Frank Habann, and René Algesheimer. "Real options theory, flexibility and the media industry." International Journal on Media Management 4, no. 4 (2002): 261–72. http://dx.doi.org/10.1080/14241270209390007.

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16

Mintah, Kwabena, David Higgins, Judith Callanan, and Ron Wakefield. "Staging option application to residential development: real options approach." International Journal of Housing Markets and Analysis 11, no. 1 (2018): 101–16. http://dx.doi.org/10.1108/ijhma-02-2017-0022.

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Purpose Real option valuation is capable of accounting for uncertainties in residential development projects but still lacks practical adoption due to limited evidence to support application of the theory in practice. The purpose of this paper is to use option valuation to value staging option embedded in residential projects and compare with results from DCF to determine which of the two methods delivers superior results. Design/methodology/approach The fuzzy payoff method (FPOM), a real options model that uses scenario planning approach to generate a range of figures, from which a single-num

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17

Da, Wu, and Wan Li Xing. "Study on the Application of Real Options in Coal Resources Investment." Advanced Materials Research 978 (June 2014): 265–71. http://dx.doi.org/10.4028/www.scientific.net/amr.978.265.

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This paper uses the real options approach to conduct research on the coal resources development investment decision by literature studies, the combination of theoretical research and practical research. It has carried on the systematic overall retrospect to the domestic and international research results about real option. It introduces and analyzes the real option theory on the basis of analyzing and appraising to the traditional investment methods systematically in detail. This paper has studied the value of the investment project again with the real option theory. It sums up the application

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18

Liginlal, Divakaran, Lara Khansa, and Stella C. Chia. "Using Real Options Theory to Evaluate Strategic Investment Options for Mobile Content Delivery." International Journal of Business Data Communications and Networking 6, no. 1 (2010): 17–37. http://dx.doi.org/10.4018/jbdcn.2010010102.

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With a rich fare of localized content, but limited regional media outlet channels, mobile content generates new business opportunities for Media News, a small media company with considerable growth potential. Two business models are considered: partnering with wireless service providers and strategic alliances with mobile content syndicators. First, the models are evaluated based on their resource requirements, market share acquisition, revenue generation, and nature, scope and control of content and bandwidth. Then, real options analysis is used to value Media News’ managerial flexibility in

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19

Vimpari, Jussi, and Seppo Junnila. "Valuing green building certificates as real options." Journal of European Real Estate Research 7, no. 2 (2014): 181–98. http://dx.doi.org/10.1108/jerer-06-2013-0012.

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Purpose – The purpose of this study is first to evaluate whether real options analysis (ROA) is suitable for valuing green building certificates, and second to calculate the real option value of a green certificate in a typical office building setting. Green buildings are demonstrated as one of the most profitable climate mitigation actions. However, no consensus exists among industry professionals about how green buildings and specifically green building certificates should be valued. Design/methodology/approach – The research design of the study involves a theoretical part and an empirical p

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20

Duku-Kaakyire, Armstrong, and David M. Nanang. "Application of real options theory to forestry investment analysis." Forest Policy and Economics 6, no. 6 (2004): 539–52. http://dx.doi.org/10.1016/s1389-9341(03)00003-0.

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21

Garvin, Michael J., and David N. Ford. "Real options in infrastructure projects: theory, practice and prospects." Engineering Project Organization Journal 2, no. 1-2 (2012): 97–108. http://dx.doi.org/10.1080/21573727.2011.632096.

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22

Li, Jing, and Alan M. Rugman. "Real options and the theory of foreign direct investment." International Business Review 16, no. 6 (2007): 687–712. http://dx.doi.org/10.1016/j.ibusrev.2007.08.004.

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23

Botteron, Pascal. "On the Practical Application of the Real Options Theory." Thunderbird International Business Review 43, no. 3 (2001): 469–79. http://dx.doi.org/10.1002/tie.1008.

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24

Fang, Shuo, Jun Liu, Min Liu, Zhi Zhang, and Yan Hong Zhou. "Photovoltaic Power Generation Investment Decision-Making Framework Based on Real Options Theory." Applied Mechanics and Materials 392 (September 2013): 480–83. http://dx.doi.org/10.4028/www.scientific.net/amm.392.480.

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In the new electricity market environment, PV project investment faces more investment risks. For photovoltaic power generation characteristics of the project and with the integrated current research, we put forward the investment decision-making framework based on real option theory; we enrich and develop the applications of real options theory about investment decisions in the electricity, there are certain theoretical and practical significances.

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25

Xue, Yong Gang, and Ming Li Zhang. "Valuing Research Investment Projects Based on Discrete Time Model: A Real Options Approach." Advanced Materials Research 926-930 (May 2014): 4073–76. http://dx.doi.org/10.4028/www.scientific.net/amr.926-930.4073.

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The methodology is proposed to value a project based on real options model firstly. Then the BOPM is used to value a project and the empirical results are compared with the results which are based on NPV approach. The results favor the application of the real option theory and show that the option value have important role on investment decision. The results show that the real option approach is more rational than the traditional NPV approach in valuing project because the uncertainty is considered in real option approach. The uncertainty with respect to project return has a substantial effect

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26

Reuer, Jeffrey J., and Tony W. Tong. "Real Options in International Joint Ventures." Journal of Management 31, no. 3 (2005): 403–23. http://dx.doi.org/10.1177/0149206304272184.

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This article empirically investigates the determinants of firms’ use of explicit call options to acquire equity in their international joint ventures (IJVs). Such options are an important contractual element of IJVs because they allow a firm to secure a claim on future expansion opportunities and to safeguard itself against various exchange hazards. The authors therefore draw on real options and transaction cost arguments, respectively, to develop hypotheses on the circumstances under which firms use such options. The article underscores the importance of studying the design of alliances in fi

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27

Kountzakis, Christos E. "The Completion of Real-Asset Markets by Options." International Journal of Mathematics and Mathematical Sciences 2010 (2010): 1–20. http://dx.doi.org/10.1155/2010/139690.

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We combine the theory of finite-dimensional lattice subspaces and the theory of regular values for maps between smooth manifolds in order to study the completion of real asset markets by options. The strike asset of the options is supposed to be a nominal asset. The main result of the paper is like in the case of the completion of a nominal asset market by options that if the strike asset of the options is the riskless asset, then the completion of a real asset market is generically equal to .

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28

Yang, Yi Ping, Hong Qiao, and Xian Fa Zeng. "Information Assessment Model Based on Low-Carbon Theory." Advanced Engineering Forum 6-7 (September 2012): 652–58. http://dx.doi.org/10.4028/www.scientific.net/aef.6-7.652.

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This paper integrates the fuzzy mathematics theory, finance theory, assessment theory and etc., using a variety of tools such as MATLAB, SPSS and Excel, under the consideration of the uncertainty and volatility of the IT investment and the diversification and intangibility of the IT profit, and builds the IT real options assessment model under the fuzzy environment. The expected investment costs and benefits are represented by fuzzy numbers, because the ambiguity of IT cost-benefit makes parameters of the model difficult to be accurately predicted. Based on the above study, taking into account

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29

Magiera, Frank T. "Realizing the Potential of Real Options: Does Theory Meet Practice?" CFA Digest 36, no. 1 (2006): 76–77. http://dx.doi.org/10.2469/dig.v36.n1.1834.

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30

Martínez Ceseña, E. A., J. Mutale, and F. Rivas-Dávalos. "Real options theory applied to electricity generation projects: A review." Renewable and Sustainable Energy Reviews 19 (March 2013): 573–81. http://dx.doi.org/10.1016/j.rser.2012.11.059.

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31

Baldi, Francesco, and Lenos Trigeorgis. "Toward a Real Options Theory of Strategic Human Resource Management." Academy of Management Proceedings 2015, no. 1 (2015): 14862. http://dx.doi.org/10.5465/ambpp.2015.14862abstract.

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32

Triantis, Alexander. "Realizing the Potential of Real Options: Does Theory Meet Practice?" Journal of Applied Corporate Finance 17, no. 2 (2005): 8–16. http://dx.doi.org/10.1111/j.1745-6622.2005.00028.x.

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33

Martinez-Cesena, Eduardo Alejandro, Brian Azzopardi, and Joseph Mutale. "Assessment of domestic photovoltaic systems based on real options theory." Progress in Photovoltaics: Research and Applications 21, no. 2 (2012): 250–62. http://dx.doi.org/10.1002/pip.2208.

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34

Čirjevskis, Andrejs. "Exploring the Link of Real Options Theory with Dynamic Capabilities Framework in Open Innovation-Type Merger and Acquisition Deals." Journal of Risk and Financial Management 14, no. 4 (2021): 168. http://dx.doi.org/10.3390/jrfm14040168.

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Although it is well established that acquisition-based dynamic capabilities have important consequences for merger and acquisition (M&A) processes, direct evidence on how real option applications can measure a dynamic capability-based synergy in open innovation-type M&A deals has been scarce. This study draws from seminal research on real options theory to explore some of these benefits and limits to value a synergy in one recent highly strategic acquisition. To strengthen the identification of causal effects, the paper develops the proposition that justifies the role of dynamic capabi

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35

Kjærland, Frode. "Simple valuation of electric utilities – a comparison of the residual income model and a real options approach." Investment Management and Financial Innovations 13, no. 2 (2016): 53–64. http://dx.doi.org/10.21511/imfi.13(2).2016.06.

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Since deregulation of the energy market in Norway, there has been a number of mergers and acquisitions of electric utilities. In all these transactions, the companies have been valued. Many of the transactions have sparked significant controversy (by politicians, consultants and others) who claim that the companies have been sold too cheaply, especially concerning hydropower generating companies. How can business valuation of these enterprises be explained? Real option theory is, in this study, applied in order to explain the value beyond a traditional approach. The residual income model propo

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36

Song, Sangcheol, Mona Makhija, and Sung Min Kim. "International investment decisions under uncertainty: Contributions of real options theory and future directions." Journal of Management & Organization 21, no. 6 (2015): 786–811. http://dx.doi.org/10.1017/jmo.2014.90.

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AbstractWe undertake a critical literature review to facilitate academic dialogs regarding decisions under uncertainty in international business settings and highlight the growing focus on international investments as conveyers of real options. Our literature review (1) provides a systematic overview of uncertainty types considered in this literature, real options identified as particular to international investments, and valuation approaches used and (2) highlights key methodological approaches used for testing real options models applied to international investments, and the controversies in

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37

Fichman, Robert G. "Real Options and IT Platform Adoption: Implications for Theory and Practice." Information Systems Research 15, no. 2 (2004): 132–54. http://dx.doi.org/10.1287/isre.1040.0021.

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38

McDonald, Robert L. "The Role of Real Options in Capital Budgeting: Theory and Practice1." Journal of Applied Corporate Finance 18, no. 2 (2006): 28–39. http://dx.doi.org/10.1111/j.1745-6622.2006.00085.x.

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39

Sharman, David M., and Ali A. Yassine. "Architectural Valuation using the Design Structure Matrix and Real Options Theory." Concurrent Engineering 15, no. 2 (2007): 157–73. http://dx.doi.org/10.1177/1063293x07079320.

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40

Driffield, Tarn, and Peter C. Smith. "A Real Options Approach to Watchful Waiting: Theory and an Illustration." Medical Decision Making 27, no. 2 (2007): 178–88. http://dx.doi.org/10.1177/0272989x06297390.

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41

Doh, Jonathan P., and John A. Pearce. "Corporate Entrepreneurship and Real Options in Transitional Policy Environments: Theory Development." Journal of Management Studies 41, no. 4 (2004): 645–64. http://dx.doi.org/10.1111/j.1467-6486.2004.00448.x.

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42

Michailidis, Anastasios, and Konstadinos Mattas. "Using Real Options Theory to Irrigation Dam Investment Analysis: An Application of Binomial Option Pricing Model." Water Resources Management 21, no. 10 (2006): 1717–33. http://dx.doi.org/10.1007/s11269-006-9122-3.

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43

Martinez, Izabelle Martinez, Gislaine Cristina Batistela, and Danilo Simões. "Strategic flexibilities: valuation of a company with the application of the Real Options Theory." Brazilian Journal of Operations & Production Management 16, no. 4 (2019): 650–58. http://dx.doi.org/10.14488/bjopm.2019.v16.n4.a10.

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Goal: In this paper, a binomial model is proposed to evaluate the option of deferring an investment and expanding the operational scale of a forest-based company that will perform the de-duplication of Pinus sp. and will market packaging for storage and transportation of vegetables. Design/Methodology/Approach: The proposed model measured the options of deferring an investment and expanding the operational scale of the forest-based company. In this perspective, the model of evaluation used was the binomial model in discrete time using the Real Options. Results: It was observed that

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44

Čirjevskis, Andrejs. "Valuing Dynamic Capabilities-Based Synergies with Real Options." Journal of Risk and Financial Management 14, no. 2 (2021): 69. http://dx.doi.org/10.3390/jrfm14020069.

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Acquisition-based dynamic capabilities have become well established as a new imperative for organizing mergers and acquisitions (M&A) processes. However, understanding the full benefits and possible limits of real options applications to measure a dynamic capability-based synergy in M&A deals remains a challenge. This paper draws on real options theory to explore some of these benefits and limits to value a synergy in two highly strategic M&A deals. More specifically, the author develops the proposition that justifies the role of dynamic capabilities as antecedents of the success o

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45

Wang, Chao, Wei Liang, and Shou Qing Wang. "Real Option in Urban Rapid Rail Transit PPP Project." Applied Mechanics and Materials 505-506 (January 2014): 437–42. http://dx.doi.org/10.4028/www.scientific.net/amm.505-506.437.

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To address a real issue in Beijing Urban Rail PPP project, an Excel model is built to solve the decision making problem of car park scale using real option theory. The model calculates the expected NPV of different options of building scale with real option embedded, avoiding the trouble of option pricing. The results show that real option can significantly optimize the decision making process of PPP projects. Especially when dealing with the problems raised by uncertainty in the process of negotiation, decision making and execution of a PPP project, real option can be more useful as it not on

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46

YAP, ROBERTO C. "Option valuation of Philippine forest plantation leases." Environment and Development Economics 9, no. 3 (2004): 315–33. http://dx.doi.org/10.1017/s1355770x03001116.

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The Philippine forest plantation lease is modelled as an option whose value arises from market uncertainty and the irreversibility inherent in sunk costs required to establish plantations. The value of this option could be a significant factor in the planting decisions of leaseholders. Real options theory could help explain why in spite of the prospects of adequate financial returns, Filipino leaseholders are slow to establish plantations. The opportunity cost of investing is demonstrated to be highly sensitive to uncertainty of the future value of the plantation. Real options analysis is also

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47

Vimpari, Jussi, and Seppo Junnila. "Valuing retail lease options through time." Journal of Property Investment & Finance 35, no. 4 (2017): 369–81. http://dx.doi.org/10.1108/jpif-05-2016-0036.

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Purpose Retail properties are a perfect example of a property class where revenues determine the rent for the property owners. Estimating the value of new retail developments is challenging, as the initial revenues can have a significant variance from the long-term revenue levels. Owners and tenants try to manage this problem by introducing different kind of options, such as overage rent and extension rights, to the lease contracts. The purpose of this paper is to value these options through time for different types of retailers, using real-life data with a method that can be easily applied in

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48

Cucchiella, Federica, and Massimo Gastaldi. "Real Option Approach for the Management of a New Product Development in the Pharmaceutical Sector." Advanced Materials Research 746 (August 2013): 551–56. http://dx.doi.org/10.4028/www.scientific.net/amr.746.551.

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The main scope of this paper is to perform a real options analysis that is often recommended as an emerging valuation technique for high-risk investment projects. The pharmaceutical sector is a sector where the real option can be positively applied to incorporate the flexibility and the risks of the new product development. In this paper the real option theory is applied to a pharmaceutical company that is developing a particular new product. Due to the uncertain nature of the new product development, it can be strategic to evaluate the real option benefits for the investment under analysis.

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49

Bhattacharyya, Som Sekhar. "Development of a conceptual framework on real options theory for strategic human resource management." Industrial and Commercial Training 50, no. 5 (2018): 272–84. http://dx.doi.org/10.1108/ict-07-2017-0061.

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Purpose The purpose of this paper is to propose a conceptual real options theory framework for the firms to use options to mitigate both investment risks and retention of the trained human resources. Design/methodology/approach This conceptual paper is built with logical argumentation. Findings The growth of IT firms has created a demand for quality IT industry employees in substantive quantity in India. IT firms provide training and development (T&D) inputs for developing better skills of employees for better employee and superior firm performance. T&D input requires firm investment.

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50

JANG, WON-JOON, and JEONG-DONG LEE. "THE APPLICATION OF REAL OPTIONS THEORY IN DEFENSE R&D PROJECTS: AN EIGHT-FOLD SEQUENTIAL COMPOUND OPTION MODEL." International Journal of Innovation and Technology Management 08, no. 01 (2011): 95–112. http://dx.doi.org/10.1142/s0219877011002179.

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Today, despite the needs of more credible valuation models in defense research and development (R&D), defense decision makers mainly focus on previous cost and NPV-based approaches to evaluate them. Defense R&D projects should be considered as a sequential compound real option due to its relevant characteristics. This paper presents a real option valuation model with the use of an eight-fold compound option in the valuation of defense R&D projects and its illustrative application using a case study in the Republic of Korea. Compared to the traditional net present value (NPV) method

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