Business Commons^™

The Market Premium For The Option To Close: Evidence From Australian Gold Mining Firms, Simone Kelly

Simone Kelly

This paper assesses whether the market valuation of gold mining firms contain a premium for the option to close. Tests of whether observed market values incorporate operating flexibility is central to our understanding of the processes that drive market values and has implications for the relevance and suitability of known theoretical pricing frameworks. This paper assesses the relevancy of the option to close for mining firm valuation. This is achieved by examining 41 Australian gold mining firms listed on the Australian Stock Exchange from 1987 to 1994 that are actively engaged in gold mining extraction and production. A pooled cross-sectional …