Corporate investment-financing policies and options theory.

Summary Corporate finance differs from market finance both in the techniques used and in the heterogeneity of its analytical schemes. However, the use of option theory is particularly fruitful for analyzing the main problems of corporate finance. On the one hand, corporate investment decisions are likely to be analyzed in terms of contingent securities when the underlying projects have a flexibility component. This gives them an option value, the taking into account of which is likely to invalidate the traditional rules of investment decisions of the net present value type. This approach to corporate operating decisions is commonly referred to in the literature as real options theory. Second, the securities issued by the firm to finance itself can also be interpreted in terms of derivatives. Options theory then allows us to develop a unified scheme for valuing these securities, with the major application of this analysis residing in the study of the default risk of private sector bonds. Finally, we can synthesize these two approaches by studying the interactions between the investment and financing policies of a firm whose assets have a flexibility component that can be analyzed in terms of real options. These interactions, which fall within the framework of agency theory, can concern both the influence of debt and the structure of the firm's shareholding on its investment decisions. This thesis thus proposes a unified approach to corporate finance through option theory. By its quantitative aspect as well as by its anchoring in the theory of arbitrage valuation, it also constitutes an attempt at methodological reconciliation between corporate and market finance.