Title :
Indexed Option Based Valuation of Private Benefits of Control
Author :
Wang, Zhebing ; Han, Liyan
Author_Institution :
Sch. of Econ. & Manage., Beihang Univ., Beijing, China
Abstract :
The benefits of control, also called voting right are treated as protective put options against the hired CEO´s capability for the first time. The indexed option pricing model is used to estimate this value. However, the results show that the value of voting right is decreasing with the incumbent CEO´s capability. Although the growth rate of the average capability of the professional manager market is exogenous, the value of the voting right is raising as the growth rate increases. This result can be used to as a reference of the determination of the premium price in corporate control market.
Keywords :
corporate modelling; pricing; stock markets; CEO; corporate control market; indexed option based valuation; indexed option pricing model; private control benefits; professional manager market; Conference management; Cost accounting; Decision making; Engineering management; Information science; Pricing; Protection; Resource management; Uncertainty; Voting;
Conference_Titel :
Information Science and Engineering (ICISE), 2009 1st International Conference on
Conference_Location :
Nanjing
Print_ISBN :
978-1-4244-4909-5
DOI :
10.1109/ICISE.2009.675
