Option Values and Endogenous Uncertainty in ESOPs, MBOs and Asset Backed Securities

10 Pages Posted: 4 Feb 2010

See all articles by Graciela Chichilnisky

Graciela Chichilnisky

Columbia University

Geoffrey M. Heal

Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER)

Dimitrios P. Tsomocos

University of Oxford - Said Business School and St. Edmund Hall

Date Written: 1995

Abstract

We consider contracts to purchase assets by means of streams of payments over time, with the asset as security. These give the purchaser an option not present if all payment is made up front, the option of stopping payments and delivering the asset in satisfaction of the remaining debt. We argue that the value inherent in such options explains the attractions of asset-backed leans, employee stock options plans and MBOs.

Keywords: Option values, Endogenous uncertainty, Employee stock option plan

JEL Classification: G12

Suggested Citation

Chichilnisky, Graciela and Heal, Geoffrey M. and Tsomocos, Dimitrios P., Option Values and Endogenous Uncertainty in ESOPs, MBOs and Asset Backed Securities (1995). Available at SSRN: https://ssrn.com/abstract=1522310 or http://dx.doi.org/10.2139/ssrn.1522310

Graciela Chichilnisky (Contact Author)

Columbia University ( email )

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HOME PAGE: http://www.chilchilnisky.com

Geoffrey M. Heal

Columbia University - Columbia Business School, Finance ( email )

3022 Broadway
New York, NY 10027
United States
212-854-6459 (Phone)
212-316-9219 (Fax)

HOME PAGE: http://www.gsb.columbia.edu/faculty/gheal/

National Bureau of Economic Research (NBER)

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Dimitrios P. Tsomocos

University of Oxford - Said Business School and St. Edmund Hall ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 1865 288 932 (Phone)
+44 1865 288 805 (Fax)

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