We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
The roles of expected profitability, Tobin's Q and cash flow in econometric models of company investment.
- Authors
Bond, Stephen; Klemm, Alexander; Newton-Smith, Rain; Syed, Murtaza; Vlieghe, Gertjan
- Abstract
This article informs that econometric models of company investment face the problem that current investment decisions depend on expectations of future conditions, but these expectations are generally not observed. The Q model of investment relates investment to the firm's stock market valuation, which is meant to reflect the present discounted value of expected future profits. Under certain assumptions about the firm's technology and competitive environment, the ratio of the stock market value of the firm to its replacement cost (tobin's Q) should be a sufficient statistic for investment.
- Subjects
ECONOMETRIC models; TOBIN'S Q ratio; MATHEMATICAL models of capital investments; INVESTMENT analysis; INVESTMENTS; MATHEMATICAL models
- Publication
Bank of England Quarterly Bulletin, 2004, Vol 44, Issue 3, p323
- ISSN
0005-5166
- Publication type
Article