Marginal q, Tobin’s q, Cash Flow, and Investment
AbstractMany studies of the determinants of investment use Tobin’s q to control for the investment opportunities of a firm. Tobin’s q roughly measures the average return on a firm’s capital anticipated by the market. More relevant for investment decisions, however, is the marginal return on capital. In this paper we estimate investment and research and development (R&D) equations using a measure of marginal q. We use marginal q to identify the existence of cash constraints and managerial discretion and as a separate explanatory variable. For a sample of 560 U.S. firms observed over the 1977–1996 period we present evidence confirming the existence of both cash constraints in some companies and managerial discretion in others.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 70 (2004)
Issue (Month): 3 (January)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Bjuggren, Per-Olof & Wiberg, Daniel, 2005. "Industry Specific Effects in Investment Performance and Valuation of Firms - Marginal q in a Stock Market Bubble," Working Paper Series in Economics and Institutions of Innovation 45, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
- Goergen, Marc & Renneboog, Luc, 2001.
"Investment policy, internal financing and ownership concentration in the UK,"
Journal of Corporate Finance,
Elsevier, vol. 7(3), pages 257-284, September.
- Goergen, M. & Renneboog, L.D.R., 2000. "Investment Policy, Internal Financing and ownership Concentration in the UK," Discussion Paper 2000-116, Tilburg University, Center for Economic Research.
- Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu, 2005.
"The determinants of merger waves,"
05-15, Utrecht School of Economics.
- Mahlich, Jörg C. & Roediger-Schluga, Thomas, 2006.
"The Determinants of Pharmaceutical R&D Expenditures: Evidence from Japan,"
UNU-MERIT Working Paper Series
015, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
- Jörg Mahlich & Thomas Roediger-Schluga, 2006. "The Determinants of Pharmaceutical R&D Expenditures: Evidence from Japan," Review of Industrial Organization, Springer, vol. 28(2), pages 145-164, 03.
- Klaus Gugler, 2003. "Corporate governance and investment," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 10(3), pages 261-289.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laura Razzolini).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.