Social value of the firm: analyses and practical applications Articles uri icon

authors

  • VAZ ANTUNES PEREIRA CORREIA, JOSE RICARDO

publication date

  • January 2015

start page

  • 39

end page

  • 60

issue

  • 68

volume

  • 23

International Standard Serial Number (ISSN)

  • 1133-455X

abstract

  • This paper analyses the social value of a firm considering different objective functions in a real options perspective. Our results show that the socially optimal investment policy is not Pareto optimal, but significant gains in the value (generated by a firm) can be obtained by departing from a strict shareholder maximizing objective. Taking into account the role of supporting businesses, this paper develops a simple cost benefit framework that serves as a tool for assessing public investment incentive policies.

keywords

  • real options; public investment incentives; capital structure; structural models; credit risk; incentives; innovations; investment; management; costs