The Valuation and Strategy of Foreign Operations Under Stochastic Price: A Real Options Model

doi:10.1520/JTE103237

淡江大學機構典藏 > 商管學院 > 管理科學學系暨研究所 > 期刊論文 > Item 987654321/90303

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題名:	The Valuation and Strategy of Foreign Operations Under Stochastic Price: A Real Options Model
作者:	Chen, Po-Yuan;Chang, Horng-Jinh;Liao, Chin-Nung
貢獻者:	淡江大學管理科學學系
關鍵詞:	foreign operation;stochastic price;real options
日期:	2011-09
上傳時間:	2013-06-07 15:55:10 (UTC+8)
出版者:	West Conshohocken: ASTM International
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.
關聯:	Journal of Testing and Evaluation 39(6), JTE103237(15pages)
DOI:	10.1520/JTE103237
顯示於類別:	[管理科學學系暨研究所] 期刊論文

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