An Improved Real Option Pricing Model of Internet Asset

Xi-Rong Gao, Jian Yang and Wen-xuan Dong
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Xi-Rong Gao: Chongqing University of Posts and Telecommunications, Chongqing, China
Jian Yang: Chongqing University of Posts and Telecommunications, Chongqing, China
Wen-xuan Dong: Chongqing University of Posts and Telecommunications, Chongqing, China

International Journal of Asian Business and Information Management (IJABIM), 2018, vol. 9, issue 2, 15-28

Abstract: This article shows that against the neglect on Internet asset value in traditional financial accounting theory and practice, the authors proposed an improved real option model for assessing Internet asset value based on Metcalfe's law and adaptive expectation hypothesis, and used it to assess the Internet asset value of Tencent company. The results showed that the improved real option model can accurately assess the value of Internet asset, and the assessment result was extremely consistent with the result assessed by efficient market theory algorithm. The results also showed that Internet asset value played a predominate role in Internet enterprise overall value, and both the initial revenue growth and estimated time had a significant positive effect on Internet asset value, and long-term industry operation cost coefficient and short-term corporate operation cost coefficient had a significant negative effect on Internet asset value. The results indicated that cutting the cost or increasing the network users could promote the value of Internet asset.

Date: 2018
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