Quotation Gugler, Klaus, Mueller, Dennis, Yurtoglu, B. Burcin. 2003. Average q, Marginal q, Cash Flow and Investment. Southern Economic Journal 70 (3): 512-531.


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Abstract

Many 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 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.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Southern Economic Journal
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new VW-D
Language English
Title Average q, Marginal q, Cash Flow and Investment
Volume 70
Number 3
Year 2003
Page from 512
Page to 531

Associations

People
Gugler, Klaus (Details)
External
Mueller, Dennis (Universit├Ąt Wien, Austria)
Yurtoglu, B. Burcin (Universit├Ąt Wien, Austria)
Organization
Research Institute for Regulatory Economics FI (Details)
Institute for Quantitative Economics IN (Details)
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