How Much Value within Foreign Direct Investment Can a Government Destroy?
University of Richmond - E. Claiborne Robins School of Business
Seattle University - Albers School of Business and Economics
January 17, 2012
Journal of Wealth Management, Forthcoming
This paper employs techniques from real options analysis to determine an actual value that can be gained or lost due to government policy instead of a speculated value. Although a government commits to promoting a particular area of business (in this case, the sugar industry in Vietnam), implementation and conflicting policies can make the investment much less profitable. By employing real options analysis, the investor gets a better picture of the losses and gains under a particular governmental policy which should lead to more prudent investment decisions.
Keywords: Real options, foreign direct investment, government policy, emerging markets
JEL Classification: F36, F37, G28Accepted Paper Series
Date posted: January 25, 2012
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