Investment in renewable energies especially solar energies is encountered with numerous uncertainties considering the increased dynamism in economic and financial conditions and makes investment in this field irreversible to a large extent, paying attention to modern methods of economic appraisal of such investments is highly important. A framework is provided in the current study in order to e...

In this paper, we discuss the real options theory and its applications in IT investment evaluation. We provide a framework within which the appropriateness of using real options theory in strategic IT investment evaluation is systematically justified. In our framework, IT investment opportunities are classified into four categories based on two criteria: the technology switching costs and the n...

In real investment, there is a relationship between external financing and abnormal stock returns. This study predicts a negative correlation between external financing and stock returns. The dependent variable of the research is stock returns and the independent variables are net financing and equity ratio. Also, control variables of the research includes assets growth, company’s size and comp...

Desired Saving Equals Desired Investment The theory says that the real interest rate r adjusts so desired saving S equals desired investment I (figure 1). As the real interest rate is the cost of capital to the firm, a lower real interest causes higher investment demand. And as the real interest rate is the return to saving, a higher real interest rate creates a greater incentive to save; and s...

Real estate investment decision-making is an important part of project development, which directly affects the risk level of real estate project development and the return on investment size. Real estate investment has features of high risks and high uncertainty. The failure of real estate investment will not only affect the enterprises’ survival and development, and may even affect the entire ...

This paper develops a framework to link the expected utility analysis to real options models in order to capture the joint effects of risk aversion and irreversibility associated with real investments. It aims at modifying the theory of investment under uncertainty by incorporating decision makers’ risk preferences and allows explicitly analyzing the impacts of risk aversion, uncertainty and ir...

By mixing concepts from both game theoretic analysis and real options theory, an investment decision in a competitive market can be seen as a “game” between firms, as firms implicitly take into account other firms’ reactions to their own investment actions. We review several real option game models, suggesting which critical problems have been “solved” by considering game theory, and which sign...

Existing research has used real options theory to study corporate venture capital (CVC) investment, yet little work has empirically examined such investment in a comparative setting. In this paper, we begin to address this gap by investigating firms’ investment mode choice between CVC and acquisition, which are alternative modes for pursuing external business development and corporate growth. W...

After 30 years of discussion and research, the academic community has established a complete theoretical system of real options and provided an excellent framework for the use of real options theory in the investment appraisal of high-tech projects. An option is an entitlement without any obligation and it has been used to describe a variety of management decisions in business investment. The d...