Chapter 16: Real Options and Cross-Border Investment Strategy

2016 ◽  
pp. 379-404
Keyword(s):  
Real Options ◽  
Investment Strategy ◽  
Cross Border

The influence of global uncertainty on the cross-border performance appraisal

2014 ◽  
Vol 43 (1) ◽  
pp. 19-40 ◽  
Author(s):  
Jane Maley ◽  
Robin Kramer
Keyword(s):  
Real Options ◽  
Performance Management ◽  
Performance Appraisal ◽  
Multinational Corporations ◽  
Content Type ◽  
Real Options Theory ◽  
Cross Border ◽  
Global Uncertainty ◽  
Profit Maximisation ◽  
Options Theory

Purpose – The aim of this paper is to examine the practice of performance management in a cross-border context in times of global uncertainty. Design/methodology/approach – This is a conceptual paper. Findings – The findings expose global uncertainty to be wielding a significant influence on performance management. Practical implications – A practical framework is developed using real options theory. This approach offers suggestions for multinational corporations to increase the effectiveness of their performance management while at the same time focusing on profit-maximisation. Originality/value – This paper enhances international management research by recognizing that real options theory can effectively be applied to improve the effectiveness of performance management in global uncertainty.

THE VALUE OF FLEXIBILITY IN ADAPTING TO CLIMATE CHANGE: A REAL OPTIONS ANALYSIS OF INVESTMENTS IN COASTAL DEFENSE

2012 ◽  
Vol 03 (02) ◽  
pp. 1250008 ◽  
Author(s):  
PETER LINQUITI ◽  
NICHOLAS VONORTAS
Keyword(s):  
Climate Change ◽  
Real Options ◽  
International Development ◽  
Monte Carlo Model ◽  
Investment Strategy ◽  
First Year ◽  
Adaptation To Climate Change ◽  
Coastal Defense ◽  
Institutional Capability ◽  
Over Time

Adaptation to climate change is likely to be a significant challenge for developing countries. We examine whether a real options approach that recognizes uncertainty and maintains future flexibility can provide an improved adaptation investment strategy. We use a Monte Carlo model to test four strategies for defending against sea level rise. Two of the strategies are inflexible, with the coastal defense fully specified in the first year of analysis. The other two strategies are flexible real options that allow adjustments in the coastal defense over time. We emphatically show that a real options strategy has the potential to increase the benefits of proactive adaptation. Our results prove to be location-dependent, underscoring the need for location-specific analysis. We find that the quality of the information obtained over time has an important bearing on option value and that a country's institutional capability and the specific mechanisms of international development assistance may affect implementation.

scholarly journals Investments Under Uncertainty in Air Transportation: A Real Options Perspective

2010 ◽  
Author(s):  
Bruno Miller ◽  
John-Paul Clarke
Keyword(s):  
Real Options ◽  
Air Transportation ◽  
Investment Strategy ◽  
Evaluation Methodology ◽  
Infrastructure Investment ◽  
Lead Times ◽  
Delivery Strategies ◽  
Managing Risk ◽  
Political Uncertainties ◽  
Flexible Infrastructure

Infrastructure investment decisions in air transportation are difficult because of long lead times, large capital expenditures and the technological, market and political uncertainties inherent in aviation. In such an environment, a flexible investment strategy is a means of managing risk. The central idea is to structure the investment so that it would benefi t from the upside potential if circumstances are resolved favorably, but would be protected from downside losses otherwise. In this paper, an evaluation methodology based on system dynamics and Monte Carlo simulation in a real options framework is utilized to evaluate different flexible infrastructure delivery strategies.

scholarly journals Measuring Synergies of Banks’ Cross-Border Mergers by Real Options: Case Study of Luminor Group AB

2021 ◽  
Vol 14 (9) ◽  
pp. 403
Author(s):  
Andrejs Čirjevskis
Keyword(s):  
Real Options ◽  
Value Added ◽  
Corporate Financing ◽  
The Real ◽  
Measurement Models ◽  
Cross Border ◽  
Valuation Method ◽  
Real Options Valuation ◽  
Market Value Added

Applying the real options valuation to measure merger and acquisition (M&A) synergy is highly debatable, with questions arising from the usefulness of this approach in real-world settings. Understanding the full benefits (and possible limits) of real options applications to measure synergy in cross-border merger activities remains a challenge. The main objective of the paper is to explore multiple types of synergies in the recent, highly strategic cross-border merger—the Luminor Group AB deal—and to value those synergies with the real options application. The research found that the sum of values of different types of synergies in M&A deals as the market value added provided by this deal could be valued with real options applications. A real options application may serve as a decision-making tool and at the same time be a useful valuation method of M&A deal synergies. The implications of this paper are twofold. First, the research contributes to corporate financing by providing relevant synergy measurement models in M&A deals. Second, the paper contributes to “grand challenges’’ research topics of international businesses by illustrating how a group of multinational banks solved the problem of income inequality across countries, and balanced inequality within their networks through a cross-border merger.

scholarly journals Investment evaluation in renewable projects under uncertainty, using real options analysis: the case of wind power industry

2017 ◽  
Vol 14 (1) ◽  
pp. 96-103 ◽  
Author(s):  
Ioannis Kinias ◽  
Ioannis Tsakalos ◽  
Nikolaos Konstantopoulos
Keyword(s):  
Wind Energy ◽  
Real Options ◽  
Electricity Market ◽  
Flow Analysis ◽  
Investment Strategy ◽  
Investment Analysis ◽  
Real Options Analysis ◽  
The Real ◽  
Capital Costs ◽  
Regulatory Policies

Investment analysis is a crucial process for any investment’s success. This process can be supported by both the discounted cash flow analysis and the real options analysis. Many researchers have point out restrictions for the first one, in cases of uncertainty in the entrepreneurial environment. The main types of uncertainty, concerning the wind energy sector, include uncertainties related to the price of electriticity by RES, the public policy regulatory policies, the demand, the initial capital costs, the technological progress, the weather conditions, the political and economical situations and generally the RES market structure. In this paper, we try to find the optimal investment strategy in a liberalized global electricity market, where the price of electricity is uncertain while the other parameters are configured separately in each country. The authors consider about the factors of the time for investment and the electricity’s price level, in wind energy by using the real options theory. The authors select a variety of data for the wind energy industry from different countries in several continents, and also create a model for the investment analysis in this entrepreneurial sector.

Sign in / Sign up

Export Citation Format

Share Document