The aim of this paper is to examine the notion that the market value of companies reflects the investors’ expectations with regard to the value of real options. We test the empirical relation between alternative estimates of the proportion of total firm market value accounted for by the value of real options and a series of variables that are supposed to disclose the actual or potential holding of real options by the company. The analysis is implemented based on a sample of 569 technological companies listed on the main OECD stock markets in the period from December 1994 to December 1999. Our analysis provides evidence in favor of the relevance of the real options portfolio value of the firm in its total market value.
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Length: Date of creation: Dec 2001 Date of revision: Publication status: Published in Journal of Business Finance & Accounting, vol. 33 no. 1&2, 2006, pages 203-219 Handle: RePEc:ntd:wpaper:2001-10