This paper analyzes a firm’s propensity to commit securities fraud and the real consequences of fraud. The theory shows that fraud has real economic cost, as investment distortions can arise from fraud-induced market misvaluation and management’s ability to influence the firm’s litigation risk through investment. The cost of inefficiency is borne by not only shareholders of fraudulent firms but...

As becomes apparent from the standard text books in industrial organization (cf. Tirole, 1988, The Theory of Industrial Organization), the analysis of the effects of uncertainty within this field is yet underdeveloped. This paper shows that the new theory of strategic real options can be used to fill this gap. Based on the work by Smets (1991) standard models are identified, and they are analyz...

The majority of previous studies on investment evaluation of RFID technology ignore the flexibility and the Real Options that this kind of investment can lead to. However, studies on the evaluation of other Information Systems have acknowledged the importance of these options as they create future business opportunities or give to managers the opportunity to take actions that could favorably in...

Real options theory has provided a useful framework for technology investment decision making. Researchers in this area have emphasized the importance of considering the option-like characteristics of IT investment projects. However, unlike financial options, investment in IT projects is typically irreversible: such investment cannot be recovered for other purposes without very costly rework. T...

making capital and investment is the main driving forces of economic development. based on the investment sensitivity to the changes of some of macro-economic variables and risk and uncertainty, the present study evaluated the effective factors on investment in private sector in iran during 1980-2007. at first, the uncertainty variables of real informal exchange rate, nominal interest rate and ...

Purpose of the paper This paper examines how the real option theory is applicable to evaluation of cases of escalation and premature termination of Management Information Systems (MIS) projects. Design/methodology/approach We compare the implications of psychological and economic escalation theories with lessons from the real option theory as applied to MIS projects. Then, we examine published ...

The paper illustrates the use of real options and game theory principles to value prototypical investment projects and capture important competitive/strategic dimensions in a step-by-step analysis of investment decisions (options) under uncertainty. It first illustrates the application of real options principles to a mining concession and to an R&D program. It then provides examples from innova...

Based on the theory of real options, this paper establishes a investment decision-making model that could evaluate the development of CCS considering some uncertainties: feed-in tariff, the clean price, carbon price, incentives and subsidies from the government and the progress of technology. This model calculates the investment value of CCS project by studying the binomial tree model of real o...