Corporate Finance and the (In)efficient Exercise of Real Options

Bart M. Lambrecht () and Grzegorz Pawlina
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Bart M. Lambrecht: Lancaster University Management School, UK
Grzegorz Pawlina: Lancaster University Management School, UK

Multinational Finance Journal, 2010, vol. 14, issue 3-4, 189-217

Abstract: This paper considers real options within a continuous-time corporate finance context. We analyze whether these real options are exercised effciently, and what the underlying sources of inefficiency are. In particular we consider the role of incomplete information, competition, search costs and financing constraints on investment decisions. We also analyze the stockholder-bondholder and the manager-stockholder agency problems, and their effect on a firm's investment and closure policies.

Keywords: real options, product market competition; costly search; financing constraints; agency problem (search for similar items in EconPapers)
JEL-codes: C61 D81 G31 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:mfj:journl:v:14:y:2010:i:3-4:p:189-217

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