The Assetment Of The Interior Value Of High-tech Company

The assessment of a company's value has attached great attention of finance researchers. But the high tech companies' characteristic of high uncertainty determines that it has a value in the form of option within itself. So, traditional methods for value assessment such as cash flow discount method, relative assessment method can't assess the inner value of the high-tech companies. Thus it is necessary to introduce the real option theory to handle the difficulties of high-tech company valuation. This paper aims at assessing the value of high-tech company which is highly uncertain, and working out the reasonable value area of the high-tech company in our country.This paper has analyzed the suitability of traditional value assessing methods when they are applied to high-tech companies on the basis of the analysis of high-tech companies' feature of high risk and high uncertainty. Considering the high uncertainty of the high tech company, this paper has also introduced the Schwarz real option model which is different from other methods of value assessment.This paper has discretized the continuous time real option model and assessed the value of China soft by using Monte Carlo simulation. The result of the research turns to be that the market price of China soft has been below its theory price until the end of 2005. It means that on one hand to some extent the price is reasonable, one the other hand. the company has a great potential of growth in the future. However, the sensitivity analysis finds that the rate of cost to income, The mean-reversion coefficient are the most important factors when considering their influence on a high-tech company.The research also finds that real option model works well, when we use it to asses the value of a high-tech company. So, we apply this model to the valuation of all listed high-tech company in soft developing sector. The research found that: the stock prices of 15 out of 17 companies were below the ceiling of their area of value. It means that the stock prices of the listed companies in the soft developing sector were underestimated, and the rising of the stock price at a later time verified the underestimation of the stock price. At last, the paper points out that further research of this field is to release some of the hypothesis of the model, and try to apply it to other high-tech industries...