Research Of The Principal-Agency Problem Impact On The Real Options

Currently the real options have been extensively used in corporate investment, but in most modern corporations, shareholders delegate the investment decision to managers. In such decentralized settings, there are likely to be both information asymmetries and agency issues. Thus the research of the principal-agency problem impact on the real options is important in the correctly investment decision and shareholder's protection.In standard context, the theory of real options dose not deal with these issues. To solve these problems, this paper extends the real options framework to account for the agency and information issues that are prevalent in many real-world applications to design the optimal contract.The paper use static comparative method. Firstly, we use timing discount factor to get the optimal option exercise principles of defer real options and put real options in the standard context of real options. Thenwe derive the optimal option exercise principles of defer real options and put real options to maximize the principal's utility in the context of agency problem and analyze the impact of agency problem on the company. The paper proposes the optimal contract of defer option and put option under the discrete time.Through the research we find that the implied investment behavior differs significantly from that of the first-best no-agency solution. In particular, there is greater inertia in investment, as the model predicts that the manager has a more valuable option to wait than the owner. The interplay between the twin forces of hidden information and hidden action leads to markedly different investment outcomes than when only one of the two forces is at work. Allowing the manager to have an effort choice that affects the likelihood of getting a high quality project mitigates the investment inefficiency resulting from information asymmetry.The paper contains three innovations:1. The model implys the lag of the investment and analyze the reasons.2. We explain why the stock price will inensively react to the unexpected company investment.3. We content the impact on the life circle of company products and try to explain the performace diffrence between non-governmententerprise and state-owned enterprise.