The Real Options Component and Market Value of Taiwan Technological Companies

Kuo-Jung Lee

Emerging Markets Finance and Trade, 2017, vol. 53, issue 1, 98-108

Abstract: Real options valuation has been applied in real investment extensively. However the empirical researches of real options components’ value are seldom studied. This study uses the panel data model to test whether the stock prices of Taiwan listed companies reflect investor’s expectations regarding the value of real options. This article demonstrates that investors cannot ignore the real options components when evaluating stock market value. The results also confirm that the proportion of a firm’s market value not due to assets-in-place is significantly and positively related to the variables of stock beta, skewness of stock returns, size, capital stock, and research and development. In addition, firms with lower firm life cycle have a higher real options value.

Date: 2017
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DOI: 10.1080/1540496X.2016.1149060

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