Technology-based startup valuation using real options with edgeworth expansion

There exists extreme difficulties while trying to valuate, using traditional valuation methods, startup firms which are dedicated to technological development. Among those methods, we could mention the balance sheet-based ones, the relative valuation ones, the cash flow discounting-based ones, and t...

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Detalles Bibliográficos
Autores principales: Milanesi, Gastón S., Pesce, Gabriela, El Alabi, Emilio
Lenguaje:Inglés
Publicado: Science and Education Publishing 2018
Materias:
Real option
Technology-based startup
Edgeworth expansion
Asymmetry
Kurtosis
Firm valuation
Acceso en línea:http://repositoriodigital.uns.edu.ar/handle/123456789/4264
Aporte de:
Repositorio Institucional Universidad Nacional del Sur (UNS) de Universidad Nacional del Sur
id I20-R126123456789-4264
record_format dspace
institution Universidad Nacional del Sur
institution_str I-20
repository_str R-126
collection Repositorio Institucional Universidad Nacional del Sur (UNS)
language Inglés
orig_language_str_mv eng
topic Real option
Technology-based startup
Edgeworth expansion
Asymmetry
Kurtosis
Firm valuation
spellingShingle Real option
Technology-based startup
Edgeworth expansion
Asymmetry
Kurtosis
Firm valuation
Milanesi, Gastón S.
Pesce, Gabriela
El Alabi, Emilio
Technology-based startup valuation using real options with edgeworth expansion
topic_facet Real option
Technology-based startup
Edgeworth expansion
Asymmetry
Kurtosis
Firm valuation
description There exists extreme difficulties while trying to valuate, using traditional valuation methods, startup firms which are dedicated to technological development. Among those methods, we could mention the balance sheet-based ones, the relative valuation ones, the cash flow discounting-based ones, and the goodwill-based ones. Those difficulties are the absence of comparable companies, the inexistence of historical data, the complexity to estimate volatility, and the number of intangible assets which give worth to the firm. This paper proposes to valuate this type of entrepreneurships using real options theory making adjustments that allow us to abandon the assumption of normal returns. Methodologically, we use real options theory adapted through Edgeworth expansion. It allows abandoning the probability of normal distribution assumption incorporating higher moments such us asymmetry and kurtosis. Obtained results let us show how the firm’s value and its strategic options are affected by stochastic higher moments’ behavior. These are often not considered because of assuming a normal behavior related to a random path of the underlying assets.
author Milanesi, Gastón S.
Pesce, Gabriela
El Alabi, Emilio
author_facet Milanesi, Gastón S.
Pesce, Gabriela
El Alabi, Emilio
author_sort Milanesi, Gastón S.
title Technology-based startup valuation using real options with edgeworth expansion
title_short Technology-based startup valuation using real options with edgeworth expansion
title_full Technology-based startup valuation using real options with edgeworth expansion
title_fullStr Technology-based startup valuation using real options with edgeworth expansion
title_full_unstemmed Technology-based startup valuation using real options with edgeworth expansion
title_sort technology-based startup valuation using real options with edgeworth expansion
publisher Science and Education Publishing
publishDate 2018
url http://repositoriodigital.uns.edu.ar/handle/123456789/4264
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AT pescegabriela technologybasedstartupvaluationusingrealoptionswithedgeworthexpansion
AT elalabiemilio technologybasedstartupvaluationusingrealoptionswithedgeworthexpansion
bdutipo_str Repositorios
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