Journal Article When Are Real Options Exercised? An Empirical Study of Mine Closings Get access Alberto Moel, Alberto Moel Monitor Corporate Finance, Monitor Group Address correspondence to Peter Tufano, Harvard Business School, Morgan Hall, Soliders Field, Boston, MA 02163, or e-mail: [email protected]. Search for other works by this author on: Oxford Academic Google Scholar Peter Tufano Peter Tufano Harvard Business School and NBER Search for other works by this author on: Oxford Academic Google Scholar The Review of Financial Studies, Volume 15, Issue 1, January 2002, Pages 35–64, https://doi.org/10.1093/rfs/15.1.35 Published: 16 June 2015

In this article, we study a well-known real option: the opening and closing of mines. Using a new database that tracks the annual opening and closing decisions of 285 developed North American gold mines in the period 1988-1997, we find that the real options model is a useful descriptor of mines' opening and shutting decisions. In addition, we find that the decision whether to shut a mine is related to firm-specific managerial factors not normally considered within a strict real options model.

This paper examines the expropriation of a foreign investor by a local partner and the subsequent resolution of the case through international arbitration in favor of the investor. Despite the investor's 99% interest in the joint venture, the local partner managed to divert the entire value of the underlying entity for his personal benefit. This clinical examination of an expropriation and its aftermath illustrates the interaction of property and contract rights in a global setting, how corporate control is shaped by geography, and how multinational firms may be advantaged by availing themselves of stronger investor protections than local firms.

In 1997, France Telecom went through a partial privatization. Using a database that tracks over 200,000 eligible participants, we analyze employees’ decisions whether to participate; how much to invest; and what stock alternatives to select. The results are broadly consistent with a neoclassical model of investing behavior. We report four anomalous findings: (1) The firm specificity of human capital has a negligible effect on employees’ investment decisions; (2) the amount invested seems driven by different forces than the decision to participate, and we attempt to measure an apparent “threshold effect”; (3) employees “left on the table” benefits worth one to two months’ salary by failing to participate; and (4) most participants underweighted the most valuable asset.