Investing And Financing Evaluation, Decision-making And Risk Management Research On Expressway Of Henan

The network of expressway forms a part of modern transportation system of China,upholding national strategy in terms of policy, economy, etc. And Henan has the longestexpressway network in China for8years, which plays significant role in promoting Henan’sdevelopment of economy and society. Coming with its fast network construction, Henanprovince is experiencing drawbacks especially on the financing&investing. This research isdedicating on solving such problems to support the development of national expresswaysystem.Firstly, this research structured credit evaluation system for major finance part ofexpressway network, being tested in depth with analytical methodologies of Majority andhierarchy process. Secondly, according to investors and financiers decision-making, thisresearch took functions of each parities into account, creating a matrix for investment decision,providing perspectives of “Game Theory and Information Economics”. This researchdiscussed risk identification and review, etc. With analysis of MVM and GVM, it simulatedBOT traffic flow, correcting bias perception affecting on risk management.This research’s innovation is reflected on the following aspects:1， A principal-agent model about decision-making on expressway investing andfinancing is established. Based on individual rationality constraint (IR) and the incentivecompatibility constraint (IC) principle, the optimal investing and financing decisions andbalanced solutions are calculated. This research can provide good theoretical support andtheoretical basis to our understanding of decision-making of and the mutual influencebetween the investing and financing bodies of expressway from the perspective of internaloperation mechanism; it is also a great complement to the existing research, and a very goodmethodological innovation;2，This research corrects the "cognitive bias" on investing and financing risk arising fromthe cognitive uncertainty about expressway project. This research will incorporate commonuncertainty and cognitive uncertainty which is often overlooked into the model, establish a financing variance model and stimulate BOT traffic flow Martingale Variance Model (MVM)and Gross Variance Model (GVM). This research found that, if cognitive uncertainty isignored in project evaluation, projects’ downside risk would be overestimated, which wouldlead to discard practical BOT projects. This conclusion has important practical implicationsfor expressway risk management.3，An evaluation system is constructed to assess the investing and financing bodies ofexpressway. This research constructs an evaluation system to assess the investing andfinancing bodies of expressway, study how such evaluation system could be used in specificproject evaluation by analyzing cases of Henan expressway projects. The construction of suchsystem is a useful addition to the existing literature, and of theoretical innovation and realisticguiding significance.