Working paper
Bias-Corrected Nonlinear Investment-q Relation in the Cross Section of Firms
SSRN
02/17/2023
DOI: 10.2139/ssrn.4360165
Abstract
We study a nonlinear relationship between firm investment and Tobin’s q in the cross section of firms. After correcting for nonseparable measurement error in q with the aid of a repeated measurement, we find evidence of heterogeneity in the investment-q relation. The investment-q sensitivity is little for firms with low and high q. On the other hand, the relationship is most sensitive to intermediate values of q. In the cross section, the true investment-q relation is thus not thoroughly linear, and investments are rather clustered at both ends of q.
Details
- Title: Subtitle
- Bias-Corrected Nonlinear Investment-q Relation in the Cross Section of Firms
- Creators
- Suyong Song - University of IowaHyunbok Wee - University of Iowa
- Resource Type
- Working paper
- Publisher
- SSRN
- DOI
- 10.2139/ssrn.4360165
- Number of pages
- 57 pages
- Alternative title
- Estimating Nonlinear Investment-q Relation in the Presence of Measurement Error
- Language
- English
- Date posted
- 02/17/2023
- Date updated
- 09/07/2023
- Academic Unit
- Finance; Economics
- Record Identifier
- 9984414159702771
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