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Mobility Barriers and Tobin's q

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  • Lustgarten, Steven
  • Thomadakis, Stavros

Abstract

The cross-sectional relation of Tobin's q to structural features of firms depends on market conditions. Features such as industry concentration; advertising and research and development intensity; firm specialization; and proxies for the use of specialized resources can operate as barriers to entry or to exit, depending on the direction of expectations. Regressions of q on structural features over periods when the "state of the economy" was clearly different strongly confirm this view. For example, concentration was positively related to q in the mid-1960s but negatively related in the mid-1970s. Coefficients for all structural variables also changed significantly. This implies that structural features must be interpreted as indexes of resources flexibility rather than as sources of stable positive rents. Copyright 1987 by the University of Chicago.

Suggested Citation

  • Lustgarten, Steven & Thomadakis, Stavros, 1987. "Mobility Barriers and Tobin's q," The Journal of Business, University of Chicago Press, vol. 60(4), pages 519-537, October.
    • Handle: RePEc:ucp:jnlbus:v:60:y:1987:i:4:p:519-37
    DOI: 10.1086/296411
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    Cited by:

    1. Braun, Gary P. & Traichal, Patrick A., 1999. "Competitiveness and the convergence of international business practice: North American evidence after NAFTA," Global Finance Journal, Elsevier, vol. 10(1), pages 107-122.
    2. Gleason, Katherine I. & Klock, Mark, 2006. "Intangible capital in the pharmaceutical and chemical industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(2), pages 300-314, May.
    3. Peter F. Orazem & Marvin L. Bouillon & Benjamin M. Doran, 2004. "Long‐Term Attachments and Long‐Run Firm Rates of Return," Southern Economic Journal, John Wiley & Sons, vol. 71(2), pages 314-333, October.
    4. Hasan, Iftekhar & Hunter, William Curt & MathisIII, Roswell E., 2000. "Promotional Expenditures, Market Competition, and Thrift Behavior," Journal of Business Research, Elsevier, vol. 50(2), pages 177-184, November.
    5. Cazavan-Jeny, Anne, 2003. "Value-relevance of expensed and capitalized intangibles - a French survey," ESSEC Working Papers DR 03022, ESSEC Research Center, ESSEC Business School.
    6. Shah, Syed Zulfiqar Ali & Stark, Andrew W. & Akbar, Saeed, 2009. "The value relevance of major media advertising expenditures: Some U.K. evidence," The International Journal of Accounting, Elsevier, vol. 44(2), pages 187-206, June.

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