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The Study on the Elaboration of Technology Valuation Model and the Adequacy of Volatility based on Real Options  

Sung, Tae-Eung (한국과학기술정보연구원)
Lee, Jongtaik (한국과학기술정보연구원)
Kim, Byunghoon (한국과학기술정보연구원)
Jun, Seung-Pyo (한국과학기술정보연구원, UST 과학기술경영정책학과)
Park, Hyun-Woo (한국과학기술정보연구원, UST 과학기술경영정책학과)
Publication Information
Journal of Korea Technology Innovation Society / v.20, no.3, 2017 , pp. 732-753 More about this Journal
Abstract
Recently, when evaluating the technology values in the fields of biotechnology, pharmaceuticals and medicine, we have needed more to estimate those values in consideration of the period and cost for the commercialization to be put into in future. The existing discounted cash flow (DCF) method has limitations in that it can not consider consecutive investment or does not reflect the probabilistic property of commercialized input cost of technology-applied products. However, since the value of technology and investment should be considered as opportunity value and the information of decision-making for resource allocation should be taken into account, it is regarded desirable to apply the concept of real options, and in order to reflect the characteristics of business model for the target technology into the concept of volatility in terms of stock price which we usually apply to in evaluation of a firm's value, we need to consider 'the continuity of stock price (relatively minor change)' and 'positive condition'. Thus, as discussed in a lot of literature, it is necessary to investigate the relationship among volatility, underlying asset values, and cost of commercialization in the Black-Scholes model for estimating the technology value based on real options. This study is expected to provide more elaborated real options model, by mathematically deriving whether the ratio of the present value of the underlying asset to the present value of the commercialization cost, which reflects the uncertainty in the option pricing model (OPM), is divided into the "no action taken" (NAT) area under certain threshold conditions or not, and also presenting the estimation logic for option values according to the observation variables (or input values).
Keywords
Technology valuation; Real options method; Black-Scholes model; Volatility; Propriety of technology investment;
Citations & Related Records
Times Cited By KSCI : 5  (Citation Analysis)
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