A reálopciók első 40 éve

Csapi, Vivien

doi:10.14267/veztud.2018.09.03

Cited by 2 publications

(2 citation statements)

References 12 publications

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“…According to Huang-Chou (2006), the real option of dropping an investment project is being protected against future operating losses. Option to switch (shutdown and restart options) allow market management to decide to stop production in adverse market conditions but do not rule out the possibility of a restart (Csapi, 2018). Option to alter includes two options, including the option to expand and option to contract that can be used in the event of a permanent and significant improvement or deterioration in market conditions.…”

Section: Literature Review Of Real Options and Venture Capitalmentioning

confidence: 99%

Real Option Analysis of Venture Capital Investments

Posza

2020

Balkans JETSS

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Venture capital investments play an important role in the development and growth of start-up companies that are characterized by a high degree of uncertainty and growth potential, and venture capital is also one of the major sources of financing for entrepreneurial businesses. In the case of venture capital investment, staging has a huge potential, so the venture capitalists keep the right to participate in further financing rounds. The real option approach as an evaluation method provides an opportunity to evaluate this kind of investment with the help of flexibility in the case of a high degree of uncertainty. The paper puts the emphasis on the evaluation and the effectiveness of venture capital investments primarily from the aspect of real option theory tested on Hungarian venture capital cases. The paper concludes that the option-based valuation methods are more suitable for evaluating venture capital investments than others, especially the discounted cash flow method.

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Section: Literature Review Of Real Options and Venture Capitalmentioning

confidence: 99%

Real Option Analysis of Venture Capital Investments

Posza

2020

Balkans JETSS

View full text Add to dashboard Cite

show abstract

“…According to Huang & Chou (2006), the real option of dropping an investment project is being protected against future operating losses. Option to switch (shutdown and restart options) allows market management to decide to stop production in adverse market conditions but do not rule out the possibility of a restart (Csapi 2018). Option to alter includes the option to expand and option to contract that can be used in the event of a permanent and significant improvement or deterioration in market conditions.…”

Section: The Real Option Approach (Roa)mentioning

confidence: 99%

The evaluation of venture capital investments using real option approach

Posza

2020

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This study attempts to explore the links between venture capital (VC) investments and the real option approach (ROA) with analyzing the characteristic features of the venture capital investments and their process. The real options can be examined as a way of thinking and evaluation method and the study's aim is to show that real option approach can provide an answer to the valuation challenges of venture capital investments. METHODOLOGYThe choice of the appropriate valuation method requires consideration of its conditions of application, which, in the case of real option theory, result from the examination of uncertainty, flexibility and irreversibility. The venture capital investments are characterized by a high degree of uncertainty and risk, which can also be traced back to the provision of financing to innovative, early-stage companies. Real option theory also provides venture capital investors with professional experience through their active role in decision-making. The study evaluates a Hungarian start-up company venture capital investment with the help of a traditional discounted cash flow method and two real option valuation models: Black -Scholes model and binomial pricing model. Then a sensitivity analysis is prepared to analyze the value driver effect on option value and a volatility analysis to verify the importance of high-degree of uncertainty in real option valuation. MOST IMPORTANT RESULTSThe paper concludes that the option-based valuation methods are more suitable for evaluating venture capital investments than other approaches such as the discounted cash flow methods, and the embedded flexibility can be determined by the real option approach. The binomial pricing model points out the advantages of staging investments with the higher real (call) option value. Besides the real option valuation, the sensitivity analysis shows a positive effect of the present value of the underlying assets, the time to maturity, the risk-free interest rate and volatility on the call option value. The analysis of the volatility emphasizes the importance of the degree of uncertainty in real option valuation. RECOMMENDATIONSThe real option approach ensures proper evaluation of venture capital investment, avoiding the undervaluation and taking advantage of staging and timing investments in practice.

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A reálopciók első 40 éve

Cited by 2 publications

References 12 publications

Real Option Analysis of Venture Capital Investments

Real Option Analysis of Venture Capital Investments

The evaluation of venture capital investments using real option approach

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