Investment and Tobin's Q
Journal of EconometricsPublished 1 January 1992
Richard Blundell, Stephen Bond, Michael Devereux, Fabio Schiantarelli
Citations478
SJR quartileQ1
SJR score12.17
SNIP4.85
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Abstract
A Q model of investment is estimated using data for an unbalanced panel of UK companies over the period 1975-86. Correlated firm-specific effects and the endogeneity of Q are allowed for using a Generalised Method of Moments estimator. In the calculation of Q we estimate the tax incentives available to individual companies. Q is found to be a significant factor in the explanation of company investment, although its effect is small and a careful treatment of the dynamic structure of Q models appears critical. In addition to Q, both cash flow and output variables are found to play an independent and significant role.
Keywords
Economics, Econometrics and Finance
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