Study On Safety Investment Value Of Coal Mines Based On Real-option-games

It is an importance reason about safety investment shortage of coal mine, that is the current safety investment assessment methods ignore such factors as external competition, future uncertainty, irreversibility, chronicity and potential, and underestimate safety investment value, and can′t measure safety investment value accurately, and influence enterprise′s aggressive for safety investment.Considering factors on coal mine safety investment and its particularity, this paper established the conceptual model of the project value of safety investment strategy under uncertain conditions based on real-option-games theory. Analytical thinking, the theoretical framework, theoretical basis, analysis tools and analysis steps of real-option-games in safety investment strategy are summed up. The following models were established:(1)According to Black-Scholes(B-S) model and binomial lattices model, extended B-S model and binomial lattices model on a coal mine property come out, which is at risk-free constant rate of interest, which is the value of the coal mine′s assets themselves have yield and safety investment projects have option value, and the solution was got by using Real Option software and Excel. The consistency and correctness of two extended models were verified by example. The results indicated that this method not only made the potential opportunities value of safety investment in coal mine is reflected fully, but also reflected the static value which was estimated by Net Present Value (NPV) method.(2)Regardless of gain in coal mine itself, a real option value model established, based on Merton model and at risk-free random rate of interest safety investment. This model makes use of Cox-Model, extended B-S model, and stochastic difference equations from China annual data of the national treasure interest rate to figure out average value at risk-free rate of interest, mean square error, and speed of closing to average value. A specific example proved the model to be more accurate in reflecting the value of security investments than the risk-free interest rate is constant if the period of safety investment is longer.(3)A two-step Compound-real-option estimating formula is provided, based on Geske compound option pricing formula, the characteristics of coal mine enterprise. Model proves to be accurate by a specific example. The early implementation of safety investment options can affect the future implementation. Compound-real-option pricing can avoid the shortcomings of NPV valuation and compute scientifically the option value of safety investment, and help the senior management in coal mine to make scientific decisions.(4)It benefits using the game theory to study on safety investment problems of coal mine, such as a solution model on safety investment of both enterprise and its employees, an optimized investment strategy to achieve a mixed strategy Nash Equilibrium solution. It also analyzes factors reflecting the relationship between the level of safety investment and employee′s loyalty. Accuracy of model is proved by examples in two coal mines. We should guide enterprises from a positive attitude to increase safety investment in order to initiate the staff′s safety and life guarantee system. In a word, only changing from the′non-cooperative game′between employees and enterprises gradually into′cooperative game′can motivate the employee′s positivity and loyalty, raise labor productivity, and improve the economic benefits of coal mine.This study realizes the accurate measurement of flexible value and strategic value in safety investment projects, making physically safety investment strategic analysis more accurate. It not only make up obvious blemish of traditional safety investment assessment methods, and the defects that the analysis of real option investment overlooked competitive factors, but also offering a kind of new approach to safety investment theories development and research, more importantly, leading to that investor′s attitude of risk change from negative into aggressive. Its item governor is active, aggressive, and dynamic for management investment.