| China has launched and implemented the strategy of"going global",encouraging local enterprises to operate on multinational basis. Multinationality necessarily involves investment.Under the circumstance of future uncertainty,the traditional vehicle used by enterprises to decide on whether to invest or not is the method of Net Present Value.Howerver,the NPV method is static and thus prone to underestimate the value of flexibility, as a result,the conclusions drawn by this method rarely coincide with the reality.It is necessary for the method to be amended.Real Option Valuation method, a new decision-making method of investment, applying the idea of financial option to corporate investment and regarding investment opportunities as a type of option, provides a new angle for investment decision-making. This method hypothesizes that there will be a series of dynamic decision-makings in the future and that the management will adjust in light of the changing commercial environment. It fully considers the characteristics of investment, that is,irreversibility, deferability, follow-up investment chances and flexibility, and thus amends traditional NPV rule, offering more accurate investment occasions. Mutinational operation is one type of investment, so it is able to be applied by Real Options method. With the advancement of China's strategy of"going global",it appears more urgent to use this more accurate method.This paper creatively applies the theory of real options into multinationality to verify its effect on corporate performance.By defining real options consciousness,theoretical hypothesis, data screening and regression analysis, we validate how multinationality will affects a multinational company's profit and downward risks, thereby arriving at a conclusion that multinational companies conscious of real options are able to decrease their downward risks and increase their profits by multinationality and operating/strategic flexibility. |
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