Which authors are influential in valuation options

Firm Size: The size of the company represents the large total assets or total capital of the company. Size is measured by taking the loga nepe of total assets. For large companies will tend to diversify the portfolio to limit financial risks.

Growth rate: Measured by annual growth of revenue. Companies with high revenue growth will be able to generate large cash flows. Therefore, investment in business development tends to increase. Secondary database is collected from audited financial statements of enterprises from to through FiinPro data system provided by StoxPlus Corporation Only collect data of non-financial enterprises.

With analytical data characteristics for companes listed from to , the panel data model will be used for analysis. The data, after had been collected, were input to the R software for analysis. Basic model, such as Fixed effect and Random effect were put in priority. Hausman test was use to find the right model for the real research data between Fixed effect and Random effect Hausman, In case there were some problems in the models, such as autocorrelation, heteroscedasticity, author would use the GLS Generalized least squares or robust.

The method of Arellano - Bond was designed to correct the fixed effects implied in the error term of the model due to some unchanged characteristics by time of the studied firms, for example, location and types of business can correlate with explanatory variables in the model. Sagan test or Hansen test and Arellano - Bond test would be use to test the appropriateness of the estimation results of GMM.

Sargan test determines the appropriateness of instrumental variables in GMM model. This is a test for over - identification restrictions, of which null hypothesis is that instrumental variables are exogenous. Therefore, the difference series studied implicitly have linear correlation - AR 1 , the testing results are ignored. Autocorrelation - AR 2 is tested on the difference series of error terms to detect autocorrelation of error terms at second order.

Hypothesis H0 of Arellano-Bond test does not have autocorrelation and is applied for the remainder of differences. Initially, the authors conducted statistics describing the research variables to provide an overview of the indicators of enterprises. With businesses obtained with conditions : having continuous reports from to The Investment average was 0. The average cash flow value for enterprise was 0. The average financial leverage ratio of enterprises was 0.

Revenue growth of businesses is at 0. Detailed parameters of the study variables are described in Table 2. The results of model selection through Hausman show that the FEM model is consistent with the research data compared to the REM model pvalue of Hausman test is equal to 0.

With the FEM model selected after Hausman test, the author continues to perform autocorrelation and heteroskedasticty tesst. The result of autocorrelation test indicates that the model does not exist autocorrelation pvalue of autocorrelation test is 0. However, the FEM model still has the heteroskedasticity so the adjustment models can be solved in this case Table 3. To adjusted the heteroskedasticity, the author used two adjusted models Robust and GLS model. At the same time, the research also uses GMM model to control endogenous in the model.

The results of all three models show that Overconfidence has a positive impact on investment. Besides, the results also indicate that the interaction variable Cash flow also has a negative impact on investment. From these results, we can see the similarity with the model that has not been modified FEM above. This indicates the model as well as research data at a sustainable level reliable Table 4.

With confidence in business operations, CEOs believe that their investment decisions yield expected future returns Lambert et al.

Administrators often expect high growth as well as success in their investment projects. This problem will make CEOs tended to invest heavily in projects that can be profitable and limit future options Gervais et al. This result indicates that enterprises with larger cash flows reduce the impact of Overconfidence on investment. Enterprises with large cash flows have a smaller degree of influence on the investment news than enterprises with lower cash flows. CEOs who are confident about the performance of enterprises with large rounds of business development in the future tend to invest less than businesses with lower Cash flow.

CEOs of larger Cash flow enterprises in this research have safer investment decisions than low cash flow firms. In contrast, CEOs of enterprises with small CFs have higher expectations for future businesses so they decide to invest more. This result shows that high-firm value often have higher investment levels than lower firm value. Positive effects from large enterprise value make businesses attract the attention of more stakeholders.

Therefore, a signal of good business is transmitted passively. Since then, enterprise continue to invest more to expand their business as well as increase their attraction to investors. The results of this study are similar to that of He et al. Financial leverage has the opposite effect on investment in enterprises negative beta and p-value less than 0. For enterprises have high debt ratios, they will be constrained by capital pressure due to cost of debt. At the same time, this result also shows that enterprises are not willing to trade in costs of debt and business performance.

CEOs are not really adventurous with the use of financial leverage to bring business performance. It can be seen that enterprises still follow the classification order theory in mobilizing their investment capital. Revenue growth has a positive impact on investment positive beta and p-value is less than 0. Enterprises have good revenue growth, this is signal that shows business is happening in a positive direction.

The increasing market share helps inscrease businesses' competitiveness in the market. Therefore, CEOs will tend to continue investment to expand the market as well as increase the competitiveness of businesses in the market. At the same time, with the strategy of taking market share, it will make the low-competitive enterprises greatly affected may lead to leaving the market and bring high-competitive enterprises to continue to get better results in the market.

This result is consistent with previous research by Jiang et al. Firm size has a positive impact on investment of enterprises positive beta and p-value less than 0. The higher the firm size of enterprises, the more investment levels will increase.

It can be seen that the expansion of firm size is always associated with the investment process for production and business activities. At the same time, large-size enterprise will face greater risks than small businesses. Therefore, the diversification of investment portfolios will reduce the risks that may occur in the enterprise. With data of enterprises listed on the Vietnam stock exchange from to businesses have continuous reports.

At the same time, the cash flow factor has a limited impact on the investment of enterprises with confident CEOs. From this research result, the study also provides some recommendations to help managers and board of directors. With the regulation of cash flow can limit excessive investment decisions of overconfident CEOs.

Especially businesses with overconfident CEOs and low cash flows are more likely to face excessive investment decisions. Therefore, investment decisions should be well controlled in the above case to avoid overinvestment by CEOs. Abstract CEOs Overconfidence can bring potentially risky early decisions to businesses, along with large enterprise free cash flow that can bring different investment decisions with CEOs Overconfidence. Introduction In the context of Vietnam's financial market has not developed into a perfectly competitive economy.

Literature Review 2. Measurement2 of Over Confidence Malmendier and Tate a implemented two main approaches that introduced excessive confidence measures. The Relationship between Over Confidence and Investment There are many researches and statements confirming the relationship between OverConfidence and investment. The Relationship between Cash Flow, Over Confidence and Investment Decisions From an investment policy perspective, the theory shows the CEO's overconfidence affects the decision to invest in businesses in three aspects including overconfidence leading to overinvestment, overconfidence to increase sensitivity of investing in cash flow, and overconfidence can bring investment to its optimal level.

Methodology 3. Table 1: Descriptive the variables The calculation of OverConfidence is as follows: Investment: equal to the total purchase of fixed assets in the year and divided by the total assets of the previous year. Data Collection and Method of Data Analysis Secondary database is collected from audited financial statements of enterprises from to through FiinPro data system provided by StoxPlus Corporation Only collect data of non-financial enterprises.

Results and Discussions 4. Table 2: Descriptive 4. Conclusion With data of enterprises listed on the Vietnam stock exchange from to businesses have continuous reports. References Abdin, S. The impact of heuristics on investment decision and performance: Exploring multiple mediation mechanisms. Research in International Business and Finance, 42, The Market for "Lemon": Quality uncertainty and the market mechanism.

Rothschild Eds. The Review of Economic Studies, 58 2 , Information asymmetry and investment-cash flow sensitivity. Free cash flow, over-investment and corporate governance in China. Pacific-Basin Finance Journal, 37, Causal attributions for success and failure in relation to expectations of success based upon selective or manipulative control. Journal of Personality, 39 4 , Heuristic Decision Making. Annual Review of Psychology, 62 1 , The Journal of Finance, 63 6 , Managerial Traits and Capital Structure Decisions.

Journal of Financial and Quantitative Analysis, 43 4 , Specification Tests in Econometrics. Econometrica, 46 6 , The paper was published in The Accounting Review in July , and has special relevance now because regulators such as the Financial Accounting Standards Board are expected to modify options accounting rules next year. Understating dilution inflates earnings per share, the authors say.

Employee options give their owners the right to buy shares at a set price anytime over a given period. The right to exercise the options may vest all at once or in stages on the first few anniversaries of the grant. Employee options usually expire if they are not exercised within 10 years.

Options appeal to employees because they can convey great value without requiring that the employee put money at risk, as one does owning actual shares of stock. By , that figure had grown to 8. The growing use of options has raised a debate about how they should be accounted for. Some advocate carrying them as an expense, arguing options have value and should be considered a compensation cost just like wages and other benefits.

This issue has received a great deal of attention in the past few years, and the FASB expected to issue new rules in requiring some form of expensing. But this still leaves the second problem of how to account for options-related dilution of share value, Guay and his colleagues say. Companies have various ways of providing the shares needed to turn over to employees who exercise options. Some companies draw on a reserve of shares that have not yet been in circulation. Others use profits to buy back shares on the open market, using them to build a reserve to meet options exercises.

If a company had one million shares outstanding and employees exercised options to purchase , shares, there would then be 1. In practice, the accounting is not as simple as in this example. Many options holders wait to exercise until shortly before their options expire, hoping the share price will rise further. Under current accounting rules, this uncertainty is handled in a fairly simple way: by figuring how many shares could be purchased at the current market price if all in-the-money options were exercised.

Those are options with a strike price lower than the current market price. A company might have one million options outstanding, but count only , in the diluted earnings per share calculation. The problem with this approach, the authors say, is that it uses too low a figure for potential options-related profits. That means it understates the number of shares that could be bought with those profits.

Hence, the dilution is understated as well.