We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
THE BOND MARKET'S q.
- Authors
Philippon, Thomas
- Abstract
I propose an implementation of the q -theory of investment using bond prices instead of equity prices. Credit risk makes corporate bond prices sensitive to future asset values, and q can be inferred from bond prices. With aggregate U.S. data, the bond market's q fits the investment equation six times better than the usual measure of q, it drives out cash flows, and it reduces the implied adjustment costs by more than an order of magnitude. Theoretical interpretations for these results are discussed.
- Subjects
UNITED States; BOND market; FINANCIAL markets; BOND prices; CREDIT risk; INVESTMENTS; CASH flow; LIQUIDITY (Economics); CORPORATE finance
- Publication
Quarterly Journal of Economics, 2009, Vol 124, Issue 3, p1011
- ISSN
0033-5533
- Publication type
Article
- DOI
10.1162/qjec.2009.124.3.1011