The Real Options Component of Firm Market Value: the Case of the Technological Corporation

Pablo de Andr‚s Alonso, Valent¡n Azofra Palenzuela () and Gabriel de la Fuente Herrero ()
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Valent¡n Azofra Palenzuela: Departamento de Econom¡a Financiera y Contabilidad, Facultad de Ciencias Econ¢micas y Empresariales, Universidad de Valladolid
Gabriel de la Fuente Herrero: Departamento de Econom¡a Financiera y Contabilidad, Facultad de Ciencias Econ¢micas y Empresariales, Universidad de Valladolid, http://www2.eco.uva.es/gfuente/

No 2001-10, Working Papers "New Trends on Business Administration". Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". from Interuniversity Research Master and Doctorate Program (with a quality mention of ANECA) on "Business Economics", Universities of Valladolid, Burgos, Salamanca and León (Spain). Until 2008, Interuniversity Doctorate Program (with a quality mention of ANECA) “New trends in Business Administration”, Universities of Valladolid, Burgos, and Salamanca (Spain). Master en Investigación y Programa de Doctorado Interuniversitarios (con mención de calidad de la ANECA) en "Economía de la Empresa", Universidades de Valladolid, Burgos, Salamanca y León (España). Hasta 2008, Programa de Doctorado Interuniversitario (con mención de calidad de la ANECA) “Nuevas Tendencias en Dirección de Empresas”, Universidades de Valladolid, Burgos y Salamanca (España).

Abstract: The aim of this paper is to examine the notion that the market value of companies reflects the investors? expectations with regard to the value of real options. We test the empirical relation between alternative estimates of the proportion of total firm market value accounted for by the value of real options and a series of variables that are supposed to disclose the actual or potential holding of real options by the company. The analysis is implemented based on a sample of 569 technological companies listed on the main OECD stock markets in the period from December 1994 to December 1999. Our analysis provides evidence in favor of the relevance of the real options portfolio value of the firm in its total market value.

Keywords: Real options; Technological Industry; Market Value. (search for similar items in EconPapers)
Date: 2001-12
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Published in Journal of Business Finance & Accounting, vol. 33 no. 1&2, 2006, pages 203-219

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