WebThis paper offers an alternative explanation based on real options. The model is frictionless on the financing side but incorporates irreversibility and fixed costs of investment. … WebLeaving theoretical elegance aside, the appeal of real options techniques is found in its ability to explain empirical investment regularities. It has long been noted that theories of investment in which the buy and sell price of capital are equalized, e.g., Tobin’s (1969) Q-theory, cannot explain investment behavior.
Can real options explain financing behavior? — Arizona State …
WebReal options theory is a major new framework in the theory of investment decision-making. It modifies NPV (Net Present Value) theory of investment decisions. NPV theory says … WebAug 2, 2024 · The application of real option analysis can take several forms. First, one can examine the possible complications of the strict application of the NPV rule to an R&D investment decision, and how the stockholder wealth may be enhanced by the use of real options analysis. ... Can real options explain financing behavior? Journal of Financial ... pouring water into toaster
Behavioral Finance - Overview, Examples and Guide
WebMay 20, 2024 · Can Real Options Explain Financing Behavior? ?. Yuri Tserlukevich. Haas School of Business. UC Berkeley. November 2005. Abstract. Dynamic structural … WebJun 11, 2024 · Motivated by this literature, empiricists have looked to taxes and financing frictions for an explanation of observed financing behavior. For example, it is commonly … WebAug 1, 2008 · The analysis of the real options effect on financing behavior in this paper has so far relied on the assumption of frictionless rebalancing. While this restricted approach is helpful in understanding a number of phenomena, it has important limitations. tour the santa fe trail