The Valuation and Strategy of Foreign Operations Under Stochastic Price: A Real Options Model
學年 100
學期 1
出版（發表）日期 2011-09-01
作品名稱 The Valuation and Strategy of Foreign Operations Under Stochastic Price: A Real Options Model
作品名稱（其他語言）
著者 Chen, Po-Yuan; Chang, Horng-Jinh; Liao, Chin-Nung
單位 淡江大學管理科學學系
出版者 West Conshohocken: ASTM International
著錄名稱、卷期、頁數 Journal of Testing and Evaluation 39(6), pp.1-15
摘要 Many multinational firms are facing diminishing profit margins in their home countries and, as a result, may move their manufacturing facilities to foreign countries to seek the benefits of lower labor costs and tax rates. Inspired by the real option models of Moon (2010) and Wu (2010), we propose a framework to explore how the fluctuations of price, cost reduction, and tax benefit factors affect the timing and the valuation of foreign investments. The sensitivity towards corporate value (real option value) and price threshold is then analyzed in illustrations. The results indicate that price drift and price volatility have opposing effects on corporate value and price threshold. In addition, the effects of tax and cost reduction factors on price threshold depend on the range of price elasticity in the demand. This study confirms that multinational firms would always seek domestic or foreign investment opportunities with relatively lower costs, tax rates, and reduced market risks as they relate to profit maximization in a global setting. Finally, this work suggests that the decision rules for the optimal entry of foreign operations significantly depend on the price elasticity of demand.
關鍵字 foreign operation; stochastic price; real options
語言 en
ISSN 0090-3973
期刊性質 國外
收錄於 SCI
產學合作
通訊作者 Chen, Po-Yuan
審稿制度 是
國別 USA
公開徵稿
出版型式 電子版 紙本
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