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Title: An Application Study of Corporate Contingent Claim Model in Enterprises Acquisition Decision——General Mills Acquired Diageo’s Pillsbury
Source: International Conference on Engineering and Business Management 2012(Part 2 Enterprise Operation and Management(2)) (pp 1311-1314)
Author(s): Qian Xu, Department of Management and Economics, Tianjin University, Tianjin, China, 300073
Donghua Han, Department of Management and Economics, Tianjin University, Tianjin, China, 300073
Shengnan Li, Department of Management and Economics, Tianjin University, Tianjin, China, 300073
Abstract: Enterprises business activities constantly meet some uncertainty but important decisions, these uncertain matters with different business or financial condition may have a great impact on the operating of a company. Especially in the process of enterprises acquisitions decision making, the traditional net-present-value method still has a certain limitations when we judge the enterprise price. The replacement of option pricing models can better assess the value of corporate contingent claim projects. The acquisition case in this paper is using the Black-Scholes model to count on a regular basis trading prices of options, and thus estimate the value of the contingent claim.
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