This paper considers investment problems in real options with non-homogeneous two-factor uncertainty. We derive some analytical properties of the resulting optimal stopping problem and present a finite difference algorithm to approximate firm’s value function exercise boundary. An important message our is that frequently applied quasi-analytical approach underestimates impact caused by fact sol...

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 co...

This paper explores whether investor sentiment has an adverse impact on corporate investment decisions and whether such impact, if present, can be effectively mitigated by sound corporate governance mechanisms. The sample comprises listed firms in Taiwan between 2003 and 2010. Empirical results indicate that investor sentiment is significantly and positively related to amount of new investment ...

Most articles that discuss the economics of security focus on the use of rational choice decision models for evaluating investment alternatives. However, security investment decisions involve risk and several researchers have noted that risk related decisions often violate the fundamental principles of rational choice decision models. Accordingly, we assert that problems exist with using these ...

Financial literacy of investors reduces uncertainty on future decisions and increases predictability of investment policies in financial markets. Thus, the lack of clear information on financial markets is a determining factor in the arrival of domestic and foreign capitals and their quick exit in case of crisis. The lack of transparency and basic knowledge on decisions and failure to provide r...

To determine whether the investment decisions of institutional plan sponsors contribute to their asset values, this study used a dataset of 80,000 yearly observations of institutional investment product assets, accounts, and returns for 19842007. Results show that plan sponsors may not be acting in their stakeholders’ best interests when they make rebalancing or reallocation decisions. Investm...