Corporate Liqudity Pricing Based On Real Options Views

The corporate liquidity refers to the current assets holding by a company or an enterprise, and in the narrow sense it means cash and cash equivalents holding by a company. Besides its book value, it also contains some potential value. Assessment the corporate liquidity value by a scientific way is very important to all investors and company managers. Pricing liquidity based on the views of real option theory is a frontier in present corporate financial theory. This study not only can open a new cognitive vision field of the corporate liquidity, but also can make us understand the containing value of the liquidity holding by the companies, then help us to get the real right evaluation of the whole company value.For the first time, this article draws into the agency cost and the opportunity cost, gives the basic model and system process of the corporate liquidity pricing.Moreover.this paper reveals the compound real options properties of the corporate liquidity, points out a new way of thinking about pricing the liquidity investment option.Then.we establish a new simple pricing model of liquidity insurance option.The most efforts are put into the pricing a company's liquidity investment option, we give respectively the liquidity investment option causal type compound real option pricing method and the liquidity investment option parallel type compound real option pricing method, then use the Geske model to deduce the common liquidity investment option pricing model, and calculates the liquidity investment option by the dynamic programming model for a comparison. Besides, this paper puts forward the the jumping diffusion pricing model of liquidity investment option, and infers the liquidity investment option pricing method including various strategies. All models are based on the numerical analysis and discussion.In the empirical part of this paper, we respectively launch the empirical researches of liquidity real option pricing method on three listed companies:Nanning Sugar Industry Co.,Ltd (000911), Dongfang Zirconium Industry Co.,Ltd (002167) and Yunnan Copper Industry Co..Ltd (000878). We separately use the discrete and the continuous methods to actually calculate the liquidity investment option of the sample listed companies, and concretely calculate the value of these companies' liquidity insurance options, then calculate the value of their agency costs, finally summary out the total value of these companies'liquidity options. The empirical result is ideal, it not only shows the details of the liquidity option pricing method system and its procedures, but also makes us genuinely see and feel the value containing in the liquidity options.In short, this paper has made an attempt on the liquidity option pricing, and provided a quantitative tools for the company in the financial management decision. Through the use of real option model, we get the value of a liquidity option. The value is not only more than the liquidity holding opportunity cost and its static value at the initial moments, but also more than the project value calculating by the common NPV method, the extra value------the net value of a liquidity option, is the result of having considered the liquidity compound option.