Date
2005
Dewey
Economie financière
Sujet
Theory of the firm; Real option; R&D; Corporate valuation; Corporate governance; Case studies
JEL code
O32; L22; G34; D81; D23
Journal issue
Journal of Management and Governance
Volume
9
Number
2
Publication date
06-2005
Article pages
129-149
Publisher
Springer
Type
Article accepté pour publication ou publié
Abstract (EN)
Including real options in firms ’ value raises numerous difficulties. Limitations concerning the relevance of option pricing models outside financial markets are the most salient, but carrying out a valuation implies other assumptions, especially on firms’ governance. In particular, assessing whether a real option should be included within a firm’s boundaries and how its value should be shared, is difficult. Most of these issues result from the different property rights on real options: who creates and who can exercise the option? We discuss existing answers to these difficulties and propose a matrix based on property rights to help practitioners decide whether a real option can be valued appropriately or not by real options models. We support our discussion with a case study based on an R&D firm valuation.