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Indexed option based valuation of private benefits of control

  • Zhebing Wang*
  • , Liyan Han
  • *Corresponding author for this work
  • Beihang University

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

The benefits of control, also called voting right are treated as protective put options against the hired CEO's capability for the first time. The indexed option pricing model is used to estimate this value. However, the results show that the value of voting right is decreasing with the incumbent CEO's capability. Although the growth rate of the average capability of the professional manager market is exogenous, the value of the voting right is raising as the growth rate increases. This result can be used to as a reference of the determination of the premium price in corporate control market.

Original languageEnglish
Title of host publication2009 1st International Conference on Information Science and Engineering, ICISE 2009
Pages4907-4910
Number of pages4
DOIs
StatePublished - 2009
Event1st International Conference on Information Science and Engineering, ICISE2009 - Nanjing, China
Duration: 26 Dec 200928 Dec 2009

Publication series

Name2009 1st International Conference on Information Science and Engineering, ICISE 2009

Conference

Conference1st International Conference on Information Science and Engineering, ICISE2009
Country/TerritoryChina
CityNanjing
Period26/12/0928/12/09

Keywords

  • Private benefits of control
  • Put option
  • Voting right

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