Investment and Tobin's Q: Some evidence from panel data

Blundell, Richard, Bond, Stephen, Devereux, Michael and Schiantarelli, Fabio (1992) Investment and Tobin's Q: Some evidence from panel data. Journal of Econometrics, 51 (1-2). pp. 233-257.


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.

Item Type: Article
Keywords: corporate tax; corporate investment
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 05 Dec 2011 11:00
Last Modified: 23 Oct 2015 14:06

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