Valuation and Return Dynamics of New Ventures

Jonathan Berk · Richard C. Green · Vasant Naik

311 citations0/0 files storedReview of Financial Studies

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Capital Investment and Risk Analysis Financial Markets and Investment Strategies Private Equity and Venture Capital

Abstract

A dynamic model of a multistage investment project that captures many features of research and development (R&D) ventures and start-up companies is developed. An important feature these problems share is that firms learn about the potential profitability of the project throughout its life, but that technical uncertainty about the R&D effort is only resolved through additional investment. Consequently the risks associated with the ultimate cash flows have a systematic component even while the purely technical risks are idiosyncratic. Our model captures these different sources of risk and allows us to study their interaction in determining the value and risk premium of the venture.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 311 citations exist upstream.

References

1987Time to build, option value, and investment decisions 1986Patents as Options: Some Estimates of the Value of Holding European Patent Stocks 1984Patents as Options: Some Estimates of the Value of Holding European Patent Stocks 1993Investments of uncertain cost 1987The Simple Economics of Research Portfolios

Cited by

2015Product market competition, R&D investment, and stock returns 2010Risk and Return Characteristics of Venture Capital-Backed Entrepreneurial Companies 2009Real Options, Product Market Competition, and Asset Returns 2016Cyclicality, performance measurement, and cash flow liquidity in private equity 2007Average Idiosyncratic Volatility in G7 Countries 2004Patents and R&D as Real Options 2009Learning, hubris and corporate serial acquisitions 2008Creative destruction and firm-specific performance heterogeneity☆

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.