Erschienen in:Stevens Institute of Technology School of Business Research Paper
Umfang:
1 Online-Ressource (21 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.3057803
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 7, 2017 erstellt
Beschreibung:
We analyze returns to lumpy projects with multiple investors. Since each investor's commitment increases the likelihood of project completion it exerts a positive externality on other investors. We show that due to this externality either a rise in the cost of abandoning the project or decreased volatility of returns to abandonment can increase ex-ante returns. These findings provide exceptions to the standard results that investment irreversibility (high abandonment costs) decreases returns and option volatility increases returns. Finally, we show that the optimal number of investors is either large or very small