Sequential Investment and Time to Build
نویسنده
چکیده
Real world investment decisions are generally made sequentially over time. The possibility of subsequent decisions like suspending a project must be considered when an initial investment decision is made. This seems to be particularly important in the case of investments, which take a long 'time to build'. This paper analyzes the impact of lags between the initial investment decision and the completion of the project on the value of an investment in a dynamic setting under uncertainty. We show how di erent parameters such as uncertainty, price changes or variable costs of production in uence the investment decisions. The results also have important implications for management accounting, as the model includes the relationship between short-term production and long-term investment decisions. JEL Classi cation: G31
منابع مشابه
IT Investment Strategy of B2B E-Commerce Website with Sequential Entry
In the competitive market of B2B e-commerce website, as customer switching cost and network externality could prevent customers to switch to later entrant, the earlier entrant has the advantage to build and retain its market share. However, the declining cost of information technology (IT) over time provides the later entrant a cost advantage. In order to maintain competitive advantage, what sh...
متن کاملHome Production Meets Time-to-build
An innovation in this paper is to introduce a time-to-build technology for the production of market capital into a model with home production. Our main finding is that the two anomalies that have plagued all household production models—the positive correlation between business and household investment, and household investment leading business investment over the business cycle—are resolved whe...
متن کاملDoes Fundraising Have Meaningful Sequential Patterns? The Case of Fintech Startups
Nowadays, fundraising is one of the most important issues for both Fintech investors and startups. The pattern of fundraising in terms of “number and type of rounds and stages needed” are important. The diverse features and factors that could stem from Fintech business models which can influence success are of the key issues in shaping these patterns. This study applied the top 100 KPMG Fintech...
متن کاملThe Centralized Sequential Investment Problem with Regional Characteristics Effect by Using Genetic Algorithms
This research aims to find a non-recurring directed path that will enable all investment regions to achieve the target revenues within the shortest period of time. We call this optimization problem the centralized sequential investment problem (CSIP). “Regional characteristics effect (RC effect)” is assumed to be the major factor that affects the expected time to achieve the target revenue for ...
متن کاملModeling The Level Of Investment Attractiveness Of The Agrarian Economy Sector
The relevance of the research topic is due to the fact that in the current economic conditions attracting additional investments will ensure the further development of the agricultural sector of the economy. The purpose of the article is to establish a close link between investment attraction and increased agricultural output. Positive dynamics were found as a result of the analysis of the dy...
متن کامل