Levers of Value

Ricardo G Barcelona and Franz Heukamp

Chapter 8 in Dynamic Decisions:Energy PIVOT, Adaptive Moves, Winning BOUnCE, 2022, pp 413-467 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The valuation process is an artful dialogue that seeks to understand the levers of a firm’s value. In approaching financial analysis in this way, managers could reframe how they can use and understand financial information as a way of quantifying the feasible outcomes of their strategic actions. This requires a structured understanding of risks, returns, and how value is appropriated, as a way to highlight what incentives are available, and how competing claims could be reconciled. In the process, how financial analyses support decision-making is transformed: Valuation opens avenues for strategic dialogue to occur rather than a narrow exercise at deriving an expected value that is “unassailable” but often wrong.

Keywords: Energy; Energy Investments; Option Games; Real Options; Climate Finance; Sustainable Investment; Dynamic Decisions; Decision Uncertainties; Renewable Energy; Fossil Fuel; Carbon Tax; Energy Transition; Behavioural Economics; Political Economy; Financial Economics; Strategy and Competition (search for similar items in EconPapers)
JEL-codes: C58 G3 G30 O13 P48 Q43 Q5 (search for similar items in EconPapers)
Date: 2022
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