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Investment and Q in Spanish Manufacturing Firms

Author

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  • Alonso-Borrego, Cesar
  • Bentolila, Samuel

Abstract

In this paper, the authors present estimates of Tobin's Q for a panel of Spanish firms over the period 1983-87 and test the Q theory of investment. The results are threefold. First, Q is significant in the investment equation but a variable proxying for liquidity constraints is also significant. Second, once those variables are included, sales are not significant. Third, the adjustment costs implied by the authors' estimated parameter are lower than those found in international empirical literature. Copyright 1994 by Blackwell Publishing Ltd

Suggested Citation

  • Alonso-Borrego, Cesar & Bentolila, Samuel, 1994. "Investment and Q in Spanish Manufacturing Firms," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(1), pages 49-65, February.
    • Handle: RePEc:bla:obuest:v:56:y:1994:i:1:p:49-65
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    Citations

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    Cited by:

    1. Behr Andreas & Bellgardt Egon, 2000. "Investitionsverhalten und Liquiditätsrestringiertheit. Eine Sensitivitätsanalyse / Investment Behaviour and Liquidity Constraints. A Sensitivity Analysis," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(3), pages 257-283, June.
    2. Manuel Espitia Escuer & Gema Pastor Agust�n, 2003. "The investment activity of Spanish firms with tangible and intangible assets," Documentos de Trabajo dt2003-08, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    3. García, Teresa & Ocaña Pérez de Tudela, Carlos, 1997. "The role of banks in relaxing financial constraints: some evidence on the investment behavior of spanish firms," DEE - Working Papers. Business Economics. WB 7030, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    4. Berck, Peter & Dabalen, Andrew, 1995. "A CGE model for California tax policy analysis: a review of literature," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7zv6b61x, Department of Agricultural & Resource Economics, UC Berkeley.
    5. Buffie, Edward F. & Atolia, Manoj, 2012. "Resurrecting the weak credibility hypothesis in models of exchange-rate-based stabilization," European Economic Review, Elsevier, vol. 56(3), pages 361-372.
    6. Sílvio Rendon, 2004. "Job Creation and Investment in Imperfect Capital and Labor Markets," Economic Working Papers at Centro de Estudios Andaluces E2004/35, Centro de Estudios Andaluces.
    7. Ángel Estrada & Javier Vallés, 1998. "Investment and financial structure in Spanish manufacturing firms," Investigaciones Economicas, Fundación SEPI, vol. 22(3), pages 337-359, September.
    8. Andrew Benito, 2002. "Financial pressure, monetary policy effects and inventory adjustment by UK and Spanish firms," Working Papers 0226, Banco de España.
    9. Jason G. Cummins & Kevin A. Hassett & Stephen D. Oliner, 2006. "Investment Behavior, Observable Expectations, and Internal Funds," American Economic Review, American Economic Association, vol. 96(3), pages 796-810, June.
    10. Cummins, Jason G. & Hassett, Kevin A. & Hubbard, R. Glenn, 1996. "Tax reforms and investment: A cross-country comparison," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 237-273, October.
    11. Garcia-Marco, Teresa & Ocana, Carlos, 1999. "The effect of bank monitoring on the investment behavior of Spanish firms," Journal of Banking & Finance, Elsevier, vol. 23(11), pages 1579-1603, November.
    12. Silvio Rendón, 2000. "Job creation under liquidity constraints: The Spanish case," Economics Working Papers 488, Department of Economics and Business, Universitat Pompeu Fabra.
    13. Berck, Peter & Dabalen, Andrew, 1995. "A CGE model for California tax policy analysis: a review of literature," CUDARE Working Papers 43910, University of California, Berkeley, Department of Agricultural and Resource Economics.
    14. Andrew Benito & Ignacio Hernando, 2007. "Firm Behaviour And Financial Pressure: Evidence From Spanish Panel Data," Bulletin of Economic Research, Wiley Blackwell, vol. 59(4), pages 283-311, October.
    15. Forster, Katrin, 2005. "Stock Prices and Real Economic Activity Empirical Results for Germany," Research Notes 20, Deutsche Bank Research.
    16. R. Glenn Hubbard, 1998. "Capital-Market Imperfections and Investment," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 193-225, March.
    17. Cristina Barceló, 2007. "A Q-model of labour demand," Investigaciones Economicas, Fundación SEPI, vol. 31(1), pages 43-78, January.
    18. Andrew Benito, 2003. "The capital structure decisions of firms: is there a pecking order?," Working Papers 0310, Banco de España.
    19. Driffield, Nigel & Pal, Sarmistha, 2001. "The East Asian crisis and financing corporate investment: is there a cause for concern?," Journal of Asian Economics, Elsevier, vol. 12(4), pages 507-527.

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