Abstract

http://ssrn.com/abstract=1815124
 
 

References (68)



 


 



Real Options in Divestment Alternatives


Nagalakshmi Damaraju


Indian School of Business (ISB), Hyderabad

Jay B. Barney


Ohio State University (OSU) - Department of Management & Human Resources

Anil K. Makhija


Ohio State University (OSU) - Department of Finance

April 19, 2011

Indian School of Business WP ISB-WP/101/2011

Abstract:     
This paper examines the implications of real options theory for both the decision to divest a business unit and the mode of divestment. It is shown that the decision to divest a business unit and the decision to engage in staged modes of divestment are both sensitive to uncertainty, consistent with the real options logic. However, in the face of uncertainty, the results suggest that staged forms of governance create real options that are of lesser value as compared to simply not divesting a business unit. Thus, this study shows that firms have real options of varied value to choose from in the context of divestments.

Keywords: Real options, Divestments, Divestment mode choices, Uncertainty

working papers series


Not Available For Download

Date posted: April 22, 2011 ; Last revised: May 29, 2014

Suggested Citation

Damaraju, Nagalakshmi and Barney, Jay B. and Makhija, Anil K., Real Options in Divestment Alternatives (April 19, 2011). Indian School of Business WP ISB-WP/101/2011. Available at SSRN: http://ssrn.com/abstract=1815124 or http://dx.doi.org/10.2139/ssrn.1815124

Contact Information

Nagalakshmi Damaraju (Contact Author)
Indian School of Business (ISB), Hyderabad ( email )
Hyderabad, Gachibowli 500 019
India

Jay Barney
Ohio State University (OSU) - Department of Management & Human Resources ( email )
700 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-688-3161 (Phone)

Anil K. Makhija
Ohio State University (OSU) - Department of Finance ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-1899 (Phone)

Feedback to SSRN


Paper statistics
Abstract Views: 588

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.328 seconds