scholarly journals TIMING DECISIONS OF HOUSING SALES AND DEVELOPMENT BASED ON REAL OPTION THEORY

2020 ◽  
Vol 0 (0) ◽  
pp. 1-12
Author(s):  
Ling Zhang ◽  
Dingyin Shi ◽  
Xin Chang ◽  
Haizhen Wen
Keyword(s):  
Trading Volume ◽  
Real Option ◽  
Price Volatility ◽  
Real Estate Market ◽  
Market Demand ◽  
Real Option Theory ◽  
Timing Decisions ◽  
Option Theory ◽  
The Cost ◽  
The Impact

Based on the real option theory, this paper studies the impact of uncertainty on the timing decisions required in housing development and sales. Data of newly-built houses and corresponding plots in Hangzhou, China, are used for empirical analysis. In order to better reflect the changes in market demand under frequent policy intervention, in addition to the usual price volatility, this paper introduces the volatility of trading volume to measure the uncertainty of China’s real estate market. The results show that the volatility of trading volume has a significant impact on timing decisions. Also, trading volume volatility can better reflect the characteristic of deferred option than can price volatility, especially during the sales phase. This study provides evidence to support Bar-Ilan and Strange’s (1998) research of sequential investment. Because of the existence of the second option, i.e., sales timing, the starts in the first stage are not too sensitive to uncertainty. In the case of the second option, the longer the construction period is, and the lower the cost of the first stage is, the higher will be the probability of triggering the start. In addition, the characteristics of market risk aversion are obvious in the study area, especially in the suburban area.

scholarly journals Real options in franchise contracting: an application of transaction cost and real options theory

2020 ◽  
Vol 50 (2) ◽  
pp. 313-337
Author(s):  
Ilir Hajdini ◽  
Josef Windsperger
Keyword(s):  
Real Options ◽  
Transaction Cost ◽  
Real Option ◽  
Environmental Uncertainty ◽  
Real Options Theory ◽  
Real Option Theory ◽  
Specific Investments ◽  
Contract Duration ◽  
Option Theory ◽  
The Impact

Abstract Previous research has not explained the use of real option clause in franchise contracting. The real option clause has two economic functions: To reduce transaction costs by mitigating opportunism risk and to increase strategic rents by exploiting the profit potential from future upside opportunities under uncertainty. We argue that franchisors will more likely use a real option clause (ROC) in franchise contracts under high behavioral uncertainty, high franchisors’ transaction-specific investments relative to franchisees’ and long contract duration. In addition, by combining transaction cost theory and real option theory, our study provides a new explanation for the impact of environmental uncertainty on the use of ROC in franchise networks by showing that there exists a U-shaped relationship between environmental uncertainty and the franchisor’s use of ROC. Overall, the data from German and Swiss franchise systems provide support of the research model.

Media multiplicity and collaborative innovation with suppliers: evidence from China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ruihong Liu ◽  
Yuanqiong He ◽  
Xiu-Hao Ding ◽  
Jianhong Li
Keyword(s):  
Real Option ◽  
Communication Media ◽  
National Bureau ◽  
Content Type ◽  
Real Option Theory ◽  
Collaborative Innovation ◽  
Using Data ◽  
Option Theory ◽  
Enterprise Survey

PurposeBased on media choice theories and real option theory, this study aims to explore the role of communication media portfolio in achieving collaborative innovation with suppliers.Design/methodology/approachUsing data of the Study of Competitiveness, Technology and Firm Linkages 2002 collected by the World Bank and the Enterprise Survey Organization of the Chinese National Bureau of Statistics, this study employed logit model to test the hypotheses. Moreover, some robustness analyses were conducted.FindingsThis study suggests that media multiplicity increases the probability for a firm to achieve collaborative innovation with suppliers on the basis of real option theory. Furthermore, distance from the suppliers and relationship formality make media multiplicity further important in collaborative innovation with suppliers.Originality/valueThrough investing how communication media portfolio affecting collaborative innovation with suppliers and the contingency factors, this study complements existing studies just concentrating on supplier capabilities, relationships with suppliers and characteristics of supplier network. Moreover, this study contributes in the information system field by exploring the role of media portfolio rather than individual media.

scholarly journals Consideration of quality change of railway transport maintenance operations in managing costs of goods transport

2018 ◽  
Vol 239 ◽  
pp. 03005
Author(s):  
Lidia Shkurina ◽  
Eugenia Maskaeva ◽  
Stanislav Maskaev
Keyword(s):  
Cost Management ◽  
Rolling Stock ◽  
Market Demand ◽  
Railway Transport ◽  
Quality Change ◽  
The Cost ◽  
The Impact ◽  
Financial Result ◽  
Freight Market

the authors reviewed the quality of operational work of railway transport in the cost management system, presented methods for assessing the impact of the quality of rolling stock on the current costs of transportation activities, considered the issues of the impact of the quality of operational work on the formation of freight market demand and of financial result of the transport company - the owner of infrastructure and traction rolling stock, represented methods of assessing financial and economic efficiency of improving the quality of operational work for the company - a participant of the freight market.

Real Option Approach for the Management of a New Product Development in the Pharmaceutical Sector

2013 ◽  
Vol 746 ◽  
pp. 551-556
Author(s):  
Federica Cucchiella ◽  
Massimo Gastaldi
Keyword(s):  
Product Development ◽  
New Product Development ◽  
Real Option ◽  
New Product ◽  
Pharmaceutical Sector ◽  
The Real ◽  
Investment Projects ◽  
Real Option Theory ◽  
Real Option Approach ◽  
Option Theory

The main scope of this paper is to perform a real options analysis that is often recommended as an emerging valuation technique for high-risk investment projects. The pharmaceutical sector is a sector where the real option can be positively applied to incorporate the flexibility and the risks of the new product development. In this paper the real option theory is applied to a pharmaceutical company that is developing a particular new product. Due to the uncertain nature of the new product development, it can be strategic to evaluate the real option benefits for the investment under analysis.

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