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Real Options : Still looking for Evidence ?

Philippe, Henri (2005), Real Options : Still looking for Evidence ?, Real Options 9th Annual International Conference, 2005-06, Paris, France

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Type
Communication / Conférence
Date
2005
Conference title
Real Options 9th Annual International Conference
Conference date
2005-06
Conference city
Paris
Conference country
France
Pages
28
Metadata
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Author(s)
Philippe, Henri
Abstract (EN)
Despite a large body of literature on the topic, empirical tests of real option models are scarce. The lack of data offers an initial explanation for this. However other intrinsic reasons could well explain why real options are difficult to test on large-scale studies. We show that the use of case studies is a partial solution to this problem since it improves our understanding of management’s behavior but not test the validity of real option models.We support our argument by the analysis of 4 empirical studies traditionally quoted in the real options literature as well as on a real-life case study.
Subjects / Keywords
Empirical test; Research methods; Case studies; Real options; Corporate valuation
JEL
C52 - Model Evaluation, Validation, and Selection
D81 - Criteria for Decision-Making under Risk and Uncertainty
G31 - Capital Budgeting; Fixed Investment and Inventory Studies; Capacity