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References
See Margrabe (1978) and Carr (1988) for the valuation of the option to switch in a single-person decision context.
See Pellens, et al. (1998).
See, e.g., Ehrbar (1998); Stern et al. (2001); Young & O’Byrne (2001).
See particularly Rogerson (1997); Reichelstein (1997). See also Baldenius (2002); Dutta & Reichelstein (1999); Dutta & Reichelstein (2002b); Dutta & Reichelstein (2002a); Pfeiffer (2000); Reichelstein (2000); Wagenhofer (2003).
See, e.g., Young & O’Byrne (2001), pp. 147–158.
See Rogerson (1997); Reichelstein (1997); Dutta & Reichelstein (2002a).
For example, Antle et al. (2000) and chapter 3 analyze agency models, where the manager has private information about an investment with an embedded real option. However, they analyze capital budgeting issues and do not consider residual income as a performance measure. Dutta & Reichelstein (2002a) analyze residual income as a performance measure for research and development investments, when the project can be abandoned before it generates cash inflows. Dutta (2003) analyzes residual income as a managerial performance measure, when the manager can invest in a growth opportunity that can also be implemented outside the firm.
For the first decision, this result follows immediately from proposition 3 in Reichelstein (1997), p. 168. The second decision can be considered as a mutually exclusive investment opportunity, and a derivation of a corresponding result is straightforward for our assumption of identically distributed cash flows.
See Rogerson (1997).
This result is the well-known Preinreich-Luecke-Theorem, see Preinreich (1937) and Lücke (1955).
See Corona (2002) for a detailed analysis of a goal congruent treatment of goodwill in business acquisitions, when residual income is used for managerial performance evaluation.
See, e.g., Friedl (2000).
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(2007). Residual Income as a Performance Measure for Switching Options. In: Real Options and Investment Incentives. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-48268-0_4
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