Asset redeployability and firm value amidst the COVID-19 pandemic: A real options perspective

Jia Chen, Xingjian Yi and Hao Liu

International Review of Financial Analysis, 2024, vol. 94, issue C

Abstract: The redeployability of a firm's assets plays a pivotal role during the COVID-19 pandemic. This paper introduces a real options model that elucidates a firm's decision-making process regarding the reallocation of assets between its primary business product and emergency supplies. Furthermore, it explores the influence of asset redeployability on firm value. Theoretical results underscore the positive impact of asset redeployability on firm value, particularly evident in firms exhibiting a strong correlation between their main business product and emergency product. Empirical evidence from data encompassing A-share listed companies in the Chinese stock market during the COVID-19 period robustly substantiates these theoretical findings.

Keywords: Asset Redeployability; COVID-19; Real option; Firm value (search for similar items in EconPapers)
JEL-codes: D21 G10 G31 L11 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:94:y:2024:i:c:s1057521924002308

DOI: 10.1016/j.irfa.2024.103298

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