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| Author: | Davis, G. A. |
| Title: | The impact of volatility on firms holding growth options |
| Journal: | Engineering Economist
2002 : VOL. 47:2, p. 213-231 |
| Index terms: | Options Volatility Technology Strategic planning |
| Language: | eng |
| Abstract: | Growth options contribute to over 95% of the market value of Internet stocks such as Amazon.com, American Online, and eBay. Finance theory promotes market volatility as being desirable for investors holding financial options. Is volatility also desirable for firms holding options? While many argue that it is, this paper presents a simple example illustrating that increasing volatility can destroy growth option value, especially for firms holding "quality" growth options. |
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