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Cited by 641

The DOI matches its Crossref record; 21 of the 21 references it cites were found in a registry or an index.

Investor valuation of the abandonment option

Open access
Berger, Philip G., Ofek, Eli, Swary, Itzhak·1996·Journal of Financial Economics
DOI 10.1016/0304-405x(96)00877-x
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Abstract

We investigate whether investors price the option to abandon a firm at its exit value. Theory prices this real option as an American put with both a stochastic strike price (exit value) and a stochastic value of the underlying security (the value of cash flows). The empirical implications are that firm value increases in exit value, after controlling for expected going-concern cash flows, and that more generalizable assets produce more abandonment option value. Using discounted earnings forecasts to proxy for expected cash flows and prior literature to categorize asset generalizability, we find strong support for the predictions of abandonment option theory.

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Crossref · 10.1016/0304-405x(96)00877-x

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Metadata

Authors
Berger, P. G., Ofek, E., & Swary, I.
Venue
Journal of Financial Economics
Publisher
Elsevier BV
Published
1996-10
Volume
42
Issue
2
Pages
259-287
ISSN
0304-405X (ISSN-L)
DOI
10.1016/0304-405x(96)00877-x
OpenAlex
W2741800057
Cited by
641
References
21
FWCI
11.65
Type
journal article
Language
en
Open access
hybrid

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CoChat. (2026). Citation check: Investor valuation of the abandonment option. https://app.cochat.ai/papers/10.1016/0304-405x(96)00877-x
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Berger, P. G., Ofek, E., & Swary, I. (1996). Investor valuation of the abandonment option. Journal of Financial Economics. https://doi.org/10.1016/0304-405x(96)00877-x

Data sources

Bibliographic data: Semantic Scholar, OpenAlex, Crossref.

Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).

Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.