title: The study on stage financing model of IT project investment.
abstract: Stage financing is the basic operation of venture capital investment. In investment, usually venture capitalists use different strategies to obtain the maximum returns. Due to its advantages to reduce the information asymmetry and agency cost, stage financing is widely used by venture capitalists. Although considerable attentions are devoted to stage financing, very little is known about the risk aversion strategies of IT projects. This paper mainly addresses the problem of risk aversion of venture capital investment in IT projects. Based on the analysis of characteristics of venture capital investment of IT projects, this paper introduces a real option pricing model to measure the value brought by the stage financing strategy and design a risk aversion model for IT projects. Because real option pricing method regards investment activity as contingent decision, it helps to make judgment on the management flexibility of IT projects and then make a more reasonable evaluation about the IT programs. Lastly by being applied to a real case, it further illustrates the effectiveness and feasibility of the model.
authors.affiliation: Institute of Information Resource Management, School of Information Technology, Jiangxi University of Finance and Economics, No. 169, East Shuanggang Road, Changbei, Nanchang, Jiangxi 330013, China.
authors.forename: Si-hua
authors.identifier: 0000-0002-8640-1520
authors.initials: SH
authors.lastname: Chen
authors.affiliation: Institute of Information Resource Management, School of Information Technology, Jiangxi University of Finance and Economics, No. 169, East Shuanggang Road, Changbei, Nanchang, Jiangxi 330013, China.
authors.forename: Sheng-hua
authors.initials: SH
authors.lastname: Xu
authors.affiliation: Department of Computer Science and Engineering, Seoul National University of Science and Technology, Seoul 139-743, Republic of Korea.
authors.forename: Changhoon
authors.identifier: 0000-0003-4292-5792
authors.initials: C
authors.lastname: Lee
authors.affiliation: Institute of Information Resource Management, School of Information Technology, Jiangxi University of Finance and Economics, No. 169, East Shuanggang Road, Changbei, Nanchang, Jiangxi 330013, China.
authors.forename: Neal N
authors.initials: NN
authors.lastname: Xiong
authors.affiliation: School of Business and Administration, Jiangxi University of Finance and Economics, No. 169, East Shuanggang Road, Changbei, Nanchang, Jiangxi 330013, China.
authors.forename: Wei
authors.identifier: 0000-0001-8323-8361
authors.initials: W
authors.lastname: He
mesh_terms: D006801:Humans; D007449:Investments; D008962:Models, Theoretical