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Euro Membership as a Real Option Trigger: An Empirical Study of EU15 Manufacturing Firms


  • Tom Aabo
  • Christos Pantzalis


This article summarizes the authors' study of manufacturing firms in the 15 countries that made up the EU prior to its 2004 expansion. The study's main finding is that the introduction of the Euro has made companies based in one of the 12 countries that opted to adopt the Euro more inclined than firms based in one of the three non-adopters (the U.K., Sweden, and Denmark) to exercise various forms of real options such as establishing alliances or partnerships, entering new markets, switching suppliers, or otherwise expanding within the Euro-area. The study also shows that smaller, more profitable but financially constrained companies are particularly likely to exercise such real options triggered by the introduction of the Euro. 2007 Morgan Stanley.

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  • Tom Aabo & Christos Pantzalis, 2007. "Euro Membership as a Real Option Trigger: An Empirical Study of EU15 Manufacturing Firms," Journal of Applied Corporate Finance, Morgan Stanley, vol. 19(4), pages 107-114.
  • Handle: RePEc:bla:jacrfn:v:19:y:2007:i:4:p:107-114

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    References listed on IDEAS

    1. Barberis, Nicholas & Thaler, Richard, 2003. "A survey of behavioral finance," Handbook of the Economics of Finance,in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 18, pages 1053-1128 Elsevier.
    2. James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2001. "Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance," NBER Working Papers 8655, National Bureau of Economic Research, Inc.
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