Optimal exercise of jointly held real options: A Nash bargaining approach with value diversion

摘要: This paper provides a two-stage decision framework in which two or more parties exercise jointly held real option. We show that single party’s timing is always socially efficient if it precedes bargaining on the terms of sharing. However, sharing rule agreed before made, then optimal attained only there cash payment element division surplus. If party chooses can divert value from project, first-best outcome may not be possible at all and second-best implemented using contract generally former cases. Our contributes to understanding range empirical regularities corporate entrepreneurial finance.