This survey paper provides an overview of real options, in particular the connection with financial options, valuation methods (analytical methods vs numerical methods based on simulation, lattice approximations to stochastic processes and finite-difference methods) and a wide array of application areas, from R&D to operations management to renewable energy project selection. 1 Real Options vs ...

We investigate the use of a warrant-pricing approach to incorporate employee stock options (ESOs) into equity valuation and to account for the dilutive effect of ESOs in the valuation of option grants for financial reporting purposes. Our valuation approach accounts for the jointly determined nature of ESO and shareholder values. The empirical results show that our stock price estimate exhibits...

We test whether mandatory IFRS adoption affects firm-level ‘crash risk,’ defined as the frequency of extreme negative stock returns. We separately analyze non-financial firms and financial firms because IFRS is likely to affect their crash risk differently. We find that crash risk decreases among non-financial firms after IFRS adoption, especially among firms in poor information environments an...

Fair value is considered here with respect to the two primary objectives of financial statements proposed in the joint conceptual framework that is under development by the FASB and the IASB, namely (a) informativeness—to assist providers of capital in predicting, evaluating, and comparing the amounts, timing and uncertainty of future cash flows, and (b) stewardship—to assist in evaluating how ...

The management and valuation of intangible resources—also called intangibles—is undoubtedly a major business preoccupation. This is particularly true for knowledge-based resources, also known as intellectual capital (IC) (Hussi, 2004; Kaufmann and Schneider, 2004). A company’s intangible resources often account for a greater proportion of its overall total resources than its tangible assets do....