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ID:
101411
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| Publication |
2011.
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| Summary/Abstract |
This paper is to develop a modified Tobin's q evaluation method which successfully combines the evaluation criteria of the traditional Tobin's q and the real options. This study provides flexible thinking for decision making criteria. That is, it clearly provides decision-makers with a reference in choosing enter or exit strategies, such as quantitative indicators references. The proposed model introduces two variables stochastic process in continuous time and explores the impact of the occurrence of unexpected events on the project value, so that, it can more authentically response to the project value. The studied issue deals with the firms that have not established energy-saving equipment yet. It attempts to figure out the optimal timing to adopt an energy-saving investment project when it is beneficial and the optimal timing to terminate it when the continuous operation of that business is unprofitable. The future discounted benefit-cost ratio, Q, follows the geometric Brownian motion with the Poisson jump process and the replacement of investment equipment. Except for the evaluation of energy-saving equipment investment project, the proposed model can be applied to other related project evaluation issues, such as energy-saving, CO2 emission reduction, or general investment projects.
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| 2 |
ID:
157669
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| Summary/Abstract |
This article looks at the association between firm market value and patenting activity in the Indian manufacturing sector, using a matched panel dataset of 380 firms spanning 22 industry groups over the period 2001–2010. To see whether the very act of patenting matters or not we introduce variation through an indicator variable indicating a firm’s patenting status, whereas to see whether having a larger number of patents matters for firm value we employ a patent stock variable. Differences in the response of firm market value to variations in these two different ways of capturing patents provide evidence for the signalling role of patents in the context of Indian manufacturing. The empirical investigations indicate that while firms that use patents to protect their innovations have a significantly higher market value than firms that do not, an increase in the number of patents granted to a firm is associated with higher market value only for firms at the lowest end of the market value distribution. The results are consistent with the explanation that patents serve as signals of firm quality.
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