How Much Value within Foreign Direct Investment Can a Government Destroy?

Journal of Wealth Management, Forthcoming

Posted: 25 Jan 2012

See all articles by Tom Arnold

Tom Arnold

University of Richmond - E. Claiborne Robins School of Business

Bonnie Buchanan

Surrey Business School, University of Surrey

Date Written: January 17, 2012

Abstract

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, G28

Suggested Citation

Arnold, Thomas M. and Buchanan, Bonnie, How Much Value within Foreign Direct Investment Can a Government Destroy? (January 17, 2012). Journal of Wealth Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1986507

Thomas M. Arnold

University of Richmond - E. Claiborne Robins School of Business ( email )

102 UR Drive
University of Richmond, VA 23173
United States
804-287-6399 (Phone)
804-289-8878 (Fax)

Bonnie Buchanan (Contact Author)

Surrey Business School, University of Surrey ( email )

Guildford
Guildford, Surrey GU2 5XH
United Kingdom

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