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    Please use this identifier to cite or link to this item: http://tkuir.lib.tku.edu.tw:8080/dspace/handle/987654321/64980

    Title: The Effects of Financing Policy on Investment Strategy under Price Uncertainty
    Authors: Chen, po-yuan;Chang, Horng-jinh
    Contributors: 淡江大學經營決策學系
    Keywords: Financing policy;Price uncertainty;Investment threshold;Real option
    Date: 2010-12
    Issue Date: 2011-10-20 16:16:17 (UTC+8)
    Publisher: Mahe: EuroJournals
    Abstract: This work attempts to present a model for the optimal investment threshold and the real option value under the price dynamics. We adopt the debt ratio as a measure of the financing policy, determining the weights for funding by debt and by equity. We consider the weight (debt ratio) as an exogenous variable, based on which the threshold and the real option value are obtained by the optimization of an investment opportunity with respect to optimal timing. Sensitivity analyses are then performed to investigate the effects of parameters such as price uncertainty, cost and tax rates, funding rates, market share, and demand elasticity under different funding policy. The results show that the price drift and volatility might demonstrate reversed effects, depending on whether demand elasticity is greater or less than one. However, the market share and the cost rate have no effect on the investment threshold, but have some impacts on real option value. In general, higher debt ratio contributes more to the investment threshold and to the real option value, confirming that financial leverage might serve as a value driver.
    Relation: International Research Journal of Finance and Economics 59, pp.23-34
    Appears in Collections:[管理科學學系暨研究所] 期刊論文

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