Analysis on the overinvestment behavior based on a real option



Yang Junmin1, Cao Zhiguang2

Science Research Management ›› 2009, Vol. 30 ›› Issue (5) : 111-116.

PDF(1010 KB)
PDF(1010 KB)
Science Research Management ›› 2009, Vol. 30 ›› Issue (5) : 111-116.

Analysis on the overinvestment behavior based on a real option

  • Yang Junmin1, Cao Zhiguang2
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Abstract

Abstract: Investment opportunity is an option to the enterprise. This option can increase the value of the enterprise. However, the exercise timing will affect the value of this option. While debt financing will bring overinvestment problem, more complicated financing behavior can alleviate the problem. Based on the Mauer-Sarkar model, the conclusion is drawn that proper financing behavior can increase the value of the real option.

Key words

real option / overinvestment / financing behavior

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Yang Junmin1, Cao Zhiguang2
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Analysis on the overinvestment behavior based on a real option[J]. Science Research Management. 2009, 30(5): 111-116
PDF(1010 KB)

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