Many firms in the oil and gas business have long used decision analysis techniques to evaluate exploration and development opportunities and have looked at recent development in option pricing theory as potentially offering improvements over the decision analysis approach. Unfortunately, it is difficult to discern the benefits of the options approach from the literature on the topic: Most of th...

this paper investigates the link between accrual and cash flow components of earnings and future abnormal earnings and equity values. the base of tests in this paper is ohlson (1999) model and net income, equity book value and return on equity book value, is the variables that used in this paper. the statistical population of this research is the firms accepted in the tehran stock exchange that...

The author empirically tests two aspects of the interaction between financial variables and inventory investment: negative cash flow and finance constraints due to asymmetric information. This is one of the first studies of inventory investment and finance constraints using Canadian data. A sample of Canadian manufacturing firms over the period 1992Q2–1999Q4 is split into subsamples based on ag...

until now single values of irr are traditionally used to estimate the time value of cash flows. since uncertainty exists in estimating cost data, the resulting decision may not be reliable. the most commonly cited drawbacks to using the internal rate of return in evaluatton of deterministic cash flow streams is the possibility of multiple conflicting internal rates of return. in this paper we p...

Vertical integration is often proposed as a way to resolve hold-up problems, ignoring the empirical fact that division managers tend to maximize divisional (not firmwide) profit when investing. This paper develops a model with asymmetric information at the bargaining stage and investment returns taking the form of cash and “empire benefits.” Owners of a vertically integrated firm then will prov...

A computer simulation model for the valuation of investments in disruptive technologies is developed. Based on the conceptual framework proposed by Christensen (1997) for explaining the Innovator’s Dilemma phenomenon, an investment project is divided into two sequential phases representing the evolution of the disruptive technology from an emerging to a mainstream market. In each of these phase...

Return on investment is a driving force that motivates and is a reward for investors. Investment returns are important for investors, in order for the entire investment game to be realized. Evaluating efficiency is the only logical way (Before risk assessment) that investors can do to compare alternative and different investments. Measuring real returns (relative to the past) is needed to bette...

In recent years, an increasing number of companies have been struggling to justify strategic technology investments using traditional capital budgeting systems. The existing accountingbased decision models (such as discounted cash-flow) are said to be no longer adequate to help evaluate investments in technological innovation, mainly because of the strategic, intangible nature of the benefits i...

Recent years have seen increased efforts to link technology strategies to business strategies, which requires expressing returns on technology investments in terms of business impacts. These impacts are usually many years in the future and highly uncertain. These factors are typically addressed by applying discounted cash flow methods to valuing alternative investments. This approach often show...

Sensitivity analysis identifies the critical aspects of the investment model that affect model output uncertainty. Common sensitivity analysis on options considers how the solution changes as a result of change in one of the key parameters (underlying asset value, volatility, exercise price, interest rate, time to maturity, dividends). In case of cash flow simulation based real options, these a...