Use Of Real Options To Assess The Value Of High-tech Enterprises

Hi-technology companies have explored their business fast since 1990s and many listed hi-tech companies highlighted the stock market. However such hi-tech shares price dropped significantly since 2000, and this move brought the issue of identification of the true market value of those hi-tech companies before many experts in the industry. The evaluation of such hi-tech companies became the focus in financial research. Many experts in such area have made much effort to study the characteristics of the hi-tech companies and the hi-tech industry and find out many principles in the hi-tech industry. The paper firstly studies on different kinds of approaches and theories of evaluation on hi-tech companies and plans. Then it mainly explains the real option model which can be used to evaluate the hi-tech company by utilizing Schwartz &Moon (2000) model and Monte Carlo simulation. Finally the author sets the listed company of Tsinghua Tongfang (Stock Code 600100) at Shanghai Stock Market as the sample of the research, so as to discuss the main factors that affect the market value of those hi-tech companies.The paper include the following three main parts, they are:I. The research on the evaluating approaches and theories for hi-tech business. Theoretically the traditional evaluating methods include inherent evaluation method and relative evaluating method.II. The contents, category, methods and models of the real option evaluating approach. The real option approach believed that it should include the following four steps when applying such approach into practice: a. Frame the application b. Implement the option valuation model c. Review the results d. Redesign if necessary. And the calculation methods mainly include: a. PDE b. Dynamic programming c. Simulations.III. The background of the sampling company, Tsinghua Tongfang Ltd., and the research results and the final conclusion. The author describes the samplingcompany in details and explains the reason why choose it as the sample of the research. As the calculating procedure is a tough one, an item of calculating software is employed to fulfill the model-calculating job. Finally the paper gives out the four main factors that significantly affect the value of the hi-tech companies.