VOLUMEN XXIII
INVIERNO 2015

SOCIAL VALUE OF THE FIRM: ANALYSES AND PRACTICAL APPLICATIONS
 
RICARDO CORREIA
Universidad Carlos III
 
This paper analyses the social value of a firm considering different objective functions in a real options perspective. Our results show that the socially optimal investment policy is not Pareto optimal, but significant gains in the value (generated by a firm) can be obtained by departing from a strict shareholder maximizing objective. Taking into account the role of supporting businesses, this paper develops a simple cost benefit framework that serves as a tool for assessing public investment incentive policies.
 
Key words: real options, public investment incentives.
JEL Classification: G31, H25, H32, G18.

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