is a senior manager in the capital markets group at Deloitte & TOuche LLP in New York. This article uses a Monte Carlo approach to estimate the value of American call options on the maximum value if baskets if more than one stock. It employs a twofactor representation of stock price vectors and analyzes stocks thatpay (continuous) dividends.Regions that form a basic valuation unit are first defined by the highest of the stock prices in each vector.These partitions are subdivided on the basis ifa second fac-

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We investigate how corporate governance influences R&D across 13 emerging markets. We find that superior corporate governance increases corporate R&D spending. These results suggest that corporate governance may influence management's discretion to avoid risky innovative projects. We also find that the link between firm-level governance and corporate R&D is stronger in countries with weaker country-level governance. These results suggest substitutability between firm and country governance in generating innovation activities.

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