In this study,we develop and empirically test a valuation model for a commonly encountered option in office leases:a tenant’s option to renew at future market rent(a fair market value)with lease termination as the ma...In this study,we develop and empirically test a valuation model for a commonly encountered option in office leases:a tenant’s option to renew at future market rent(a fair market value)with lease termination as the maturity date.The model integrates decision analysis with real options analysis and market risk with private risks.“Option value”is defined as the private value of the option to either party pre-contract,while“option price”assumes a fair agreement between transacting parties and can be positive(rental premium paid)or negative(rental discount offered).Without manifest expectations,an analysis of a sample of office leases supports the model’s logic with price estimates in a practical range.The tenants’option price/value is shown to have a negative relationship with the original/renewal lease term;conversely,the landlords’option value is positively related to the original/renewal term.Comparative analyses show that transaction costs have a positive effect on tenants’option value and on prices,while vacancy costs and the vacancy period are both positively related to the landlords’option value and negatively related to price.Market rent is found to have a negative relationship with option price.Overall,this study provides a theoretical analysis and empirical tests of the value of a real option that allows option holders to renew/extend their contracts at a fair market value.展开更多
Considering International Financial Reporting Standards （henceforth IFRS）, although fair value is suggested in the conceptual framework and related standards, concept of measurement is used instead of concept of val...Considering International Financial Reporting Standards （henceforth IFRS）, although fair value is suggested in the conceptual framework and related standards, concept of measurement is used instead of concept of valuation. Determining the fair value of the acquiree specific into business combination, is needed to identify the fair value of the valuation made beyond the measurement of either monetary items or non-monetary items in the financial statements. Essential reason of the difference between acquired entity＇s fair values as a basis of financial reporting standards and valuation standards, the fair value according to IFRS is equivalent to the market value according to International Valuation Standards （henceforth IVS）. The fair value in accordance with IVS, the combination of the market value, and the synergistic value of the asset are subject to valuation in terms of special purchaser. When business is concerned, considering parameters such as the position in the industry, brand awareness, intellectual capital, geography, cannot be expected to be equal to the fair value of business which simply consists of market value among market participants. The ultimate aim of the study is to illustrate how to determine synergistic value in the terms oflVS which shows the difference between the market value and fair value. Based on the findings of the study, if acquired assets and liabilities are recognized in accordance with IFRS, goodwill comes out during the acquisition. Though, when fair value is determined based on IVS, goodwill is not found, even profitable business combination is realized. This is the result of considered fair value based on IVS Framework, that is the combination of market value of an asset in question and total synergistic value.展开更多
基金research grants(P0030199 and P0038209)from the Hong Kong Polytechnic University。
文摘In this study,we develop and empirically test a valuation model for a commonly encountered option in office leases:a tenant’s option to renew at future market rent(a fair market value)with lease termination as the maturity date.The model integrates decision analysis with real options analysis and market risk with private risks.“Option value”is defined as the private value of the option to either party pre-contract,while“option price”assumes a fair agreement between transacting parties and can be positive(rental premium paid)or negative(rental discount offered).Without manifest expectations,an analysis of a sample of office leases supports the model’s logic with price estimates in a practical range.The tenants’option price/value is shown to have a negative relationship with the original/renewal lease term;conversely,the landlords’option value is positively related to the original/renewal term.Comparative analyses show that transaction costs have a positive effect on tenants’option value and on prices,while vacancy costs and the vacancy period are both positively related to the landlords’option value and negatively related to price.Market rent is found to have a negative relationship with option price.Overall,this study provides a theoretical analysis and empirical tests of the value of a real option that allows option holders to renew/extend their contracts at a fair market value.
文摘Considering International Financial Reporting Standards （henceforth IFRS）, although fair value is suggested in the conceptual framework and related standards, concept of measurement is used instead of concept of valuation. Determining the fair value of the acquiree specific into business combination, is needed to identify the fair value of the valuation made beyond the measurement of either monetary items or non-monetary items in the financial statements. Essential reason of the difference between acquired entity＇s fair values as a basis of financial reporting standards and valuation standards, the fair value according to IFRS is equivalent to the market value according to International Valuation Standards （henceforth IVS）. The fair value in accordance with IVS, the combination of the market value, and the synergistic value of the asset are subject to valuation in terms of special purchaser. When business is concerned, considering parameters such as the position in the industry, brand awareness, intellectual capital, geography, cannot be expected to be equal to the fair value of business which simply consists of market value among market participants. The ultimate aim of the study is to illustrate how to determine synergistic value in the terms oflVS which shows the difference between the market value and fair value. Based on the findings of the study, if acquired assets and liabilities are recognized in accordance with IFRS, goodwill comes out during the acquisition. Though, when fair value is determined based on IVS, goodwill is not found, even profitable business combination is realized. This is the result of considered fair value based on IVS Framework, that is the combination of market value of an asset in question and total synergistic value.
