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Asset redeployability and firm value amidst the COVID-19 pandemic: A real options perspective

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  • Chen, Jia
  • Yi, Xingjian
  • Liu, Hao

Abstract

The redeployability of a firm's assets plays a pivotal role during the COVID-19 pandemic. This paper introduces a real options model that elucidates a firm's decision-making process regarding the reallocation of assets between its primary business product and emergency supplies. Furthermore, it explores the influence of asset redeployability on firm value. Theoretical results underscore the positive impact of asset redeployability on firm value, particularly evident in firms exhibiting a strong correlation between their main business product and emergency product. Empirical evidence from data encompassing A-share listed companies in the Chinese stock market during the COVID-19 period robustly substantiates these theoretical findings.

Suggested Citation

  • Chen, Jia & Yi, Xingjian & Liu, Hao, 2024. "Asset redeployability and firm value amidst the COVID-19 pandemic: A real options perspective," International Review of Financial Analysis, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:finana:v:94:y:2024:i:c:s1057521924002308
    DOI: 10.1016/j.irfa.2024.103298
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    More about this item

    Keywords

    Asset Redeployability; COVID-19; Real option; Firm value;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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