Real Option Exercise: Empirical Evidence / Paul Décaire, Erik P. Gilje, Jérôme P. Taillard.

Format:

Book

Author/Creator:

Décaire, Paul.

Contributor:

National Bureau of Economic Research.

Gilje, Erik P.

Taillard, Jérôme P.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25624.

NBER working paper series no. w25624

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Real Option Exercise

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

We study when and why firms exercise real options. Using detailed project-level investment data, we find that the likelihood that a firm exercises a real option is strongly related to peer exercise behavior. Peer exercise decisions are as important in explaining exercise behavior as variables commonly associated with standard real option theories, such as volatility. We identify peer effects using localized exogenous variation in peer project exercise decisions and find evidence consistent with information externalities being important for exercise behavior.

Notes:

Print version record

February 2019.