Why Does Equity Capital Flow out of High Tobin’s $\boldsymbol{q}$ Industries?

2020 ◽  
Author(s):  
Dong Wook Lee ◽  
Hyun-Han Shin ◽  
René M Stulz
Keyword(s):  
Cross Section ◽  
Capital Markets ◽  
Capital Flows ◽  
Equity Capital ◽  
Capital Expenditures ◽  
Stock Repurchases ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
High Q ◽  
Investment Opportunities

Abstract High Tobin’s $q$ industries receive more funding from capital markets than low Tobin’s $q$ industries from 1971 to 1996. Since then, the opposite is true. The key to understanding this shift is that large firms, for which $q$ is more a proxy for rents than investment opportunities, have become more important within industries. For these firms, repurchases but not capital expenditures increase in the cross-section with $q$, so that $q$ explains the variation of repurchases more than of capital expenditures. Consequently, equity capital flows out of high $q$ industries because for these industries stock repurchases are high and issuances are low.

The Economic Impact of Corporate Capital Expenditures: Focused Firms versus Diversified Firms

2006 ◽  
Vol 41 (2) ◽  
pp. 341-355 ◽  
Author(s):  
Sheng-Syan Chen
Keyword(s):  
Economic Impact ◽  
Capital Markets ◽  
Operating Performance ◽  
Capital Expenditures ◽  
Internal Capital Markets ◽  
Capital Investments ◽  
Corporate Capital ◽  
Investment Opportunities ◽  
Diversified Firms

AbstractThis paper examines the role of focus versus diversification in explaining the economic impact of corporate capital investments. I find that the stock market's responses to announcements of capital investments are more favorable for focused firms than for diversified firms. I also show that focused firms exhibit significantly better post-investment operating performance than diversified firms. The overall findings in this study suggest that the investment opportunities hypothesis dominates the internal capital markets hypothesis in terms of the net economic impact of capital investments on the investing firms.

Competition, self-organization, and social scaling—accounting for the observed distributions of Tobin’s q

2019 ◽  
Vol 28 (6) ◽  
pp. 1587-1610 ◽  
Author(s):  
Paulo L dos Santos ◽  
Ellis Scharfenaker
Keyword(s):  
Capital Markets ◽  
Capital Gains ◽  
Theoretic Model ◽  
Tobin’S Q ◽  
Cross Sectional ◽  
Tobin's Q ◽  
Information Theoretic ◽  
Corporate Managers ◽  
Persistent Pattern ◽  
Statistical Regularities

AbstractWe develop a systemic, information-theoretic model of competitive capital-market functioning that can account for the observed statistical regularities in cross-sectional distributions of the logarithm of Tobin’s q for US non-financial corporations since 1962. The model considers capital markets as a self-organizing system driven by competitive interactions among investors and corporate managers. The persistent pattern of organization we observe in those distributions is primarily defined by the efforts of corporate managers to appropriate arbitrage capital gains defined by heterogeneity across individual measures of the logarithm of Tobin’s q. Competition ensures the structures of security prices shaped by those efforts reflect an aggregate tradeoff between the gross returns and costs they pose to corporate managers. The distributions are also influenced by the endogenous, competitive formation of the opportunity cost of capital corporations face, which is conditioned by what investors come to expect to be a typical or general expected rate of return on assets across all corporations. In addition to offering an economic account of what we observe, the resulting framework defines new conceptualizations and aggregate measures of the informational and allocative performance of capital markets. Those suggest the performance of US capital markets has deteriorated since the 1980s.

Why Does Equity Capital Flow Out of High Tobin’s q Industries?

2020 ◽  
Author(s):  
Dong Wook Lee ◽  
Hyun-Han Shin ◽  
Rene M. Stulz
Keyword(s):  
Capital Flow ◽  
Equity Capital ◽  
Tobin’S Q ◽  
Tobin's Q

scholarly journals Penyebaran Kepemilikan, Likuiditas, dan Nilai Perusahaan: Bukti Dari Indonesia

2021 ◽  
Vol 6 (12) ◽  
pp. 6396
Author(s):  
Syaipul Malik Ibrahim ◽  
Dewi Hanggraeni
Keyword(s):  
Time Series ◽  
Cross Section ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Bid Ask Spread ◽  
Thomson Reuters

Penelitian ini bertujuan untuk menyelidiki hubungan antara penyebaran kepemilikan, likuiditas, dan nilai perusahaan menggunakan sampel dari 225 Perusahaan pada kondisi pasar di Bursa Efek Indonesia (“BEI”) sejak 2014 hingga 2019. Penelitian ini menguji penyebaran kepemilikan yang diukur dengan free float, likuiditas sebagai diukur dengan Amihud Illiquidity, nilai perusahaan yang diukur dengan Tobin's Q, dan total aset, rasio laba operasi terhadap harga, rasio leverage keuangan, laba operasi terhadap aset, relative bid-ask spread, turnover, depth, tingkat pengembalian saham, dan tingkat pengembalian aset sebagai variabel kontrol. Penelitian ini menggunakan data panel, yang merupakan kombinasi data cross-section dan time-series dari datastream Thomson Reuters. Penelitian ini menunjukkan bahwa free float berhubungan negatif dengan likuiditas saham dan nilai perusahaan sedangkan likuiditas saham berhubungan positif dengan nilai perusahaan. Temuan kami tidak hanya konsisten dengan beberapa penelitian sebelumnya dalam kaitannya dengan penyebaran kepemilikan yang memiliki hubungan negatif antara Tobin's Q dan penyebaran kepemilikan yang berdampak negatif terhadap likuiditas saham, tetapi juga dapat berfungsi sebagai pengingat bagi investor bahwa saham yang likuid mungkin tidak memberikan pengembalian yang positif

Investment and Cash Flow Sensitivity under Investment Opportunities: Evidence from Pakistani Manufacturing Firms

2017 ◽  
Vol 1 (1) ◽  
pp. 13
Author(s):  
Muhammad Kashif Khurshid ◽  
Imtiaz Zahid ◽  
Akmal Khan
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Control Variable ◽  
Manufacturing Firms ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Investment Opportunities ◽  
Cash Flow Sensitivity ◽  
Relationship Of ◽  
The Relationship

This paper examines the relationship between cash flow and investment under high and low investment opportunities of 167 Pakistani non-financial manufacturing firms listed in the Pakistan Stock Exchange during the period 2004-2013. Tobin’s Q is employed to capture the investment opportunities and sales are taken as control variable. A panel regression model is used to investigate the relationship of cash flow, Tobin’s Q and sales on investment. In case of high investment opportunities firms, the relationship of investment and cash flow is positive and significant while under low investment opportunities firms, this relationship is also positive but insignificant. These results indicate that the high opportunities firms rely mostly on internally generated cash flow whereas the low investment opportunities firms prefer to distribute its earnings as a dividend.

An examination of open market stock repurchases: cash flow signalling, investments, and Tobin's Q

1996 ◽  
Vol 6 (1) ◽  
pp. 9-18 ◽  
Author(s):  
George P. Tsetsekos ◽  
Feng-Ying Liu ◽  
Nicos Floros
Keyword(s):  
Cash Flow ◽  
Stock Repurchases ◽  
Open Market ◽  
Tobin’S Q ◽  
Tobin's Q

scholarly journals Debt Capacity and Financial Performance of Quoted Firms in Nigeria

2021 ◽  
Vol 6 (2) ◽  
pp. 1-24
Author(s):  
Matthew Asaolu
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Significant Relationship ◽  
Market Performance ◽  
Performance Measure ◽  
Equity Capital ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Debt Capacity ◽  
The Capital Structure

Introduction: The field of research treating debt capacity can be comprehended as a unique piece of a lot more extensive capital structure hypothesis. This started with the paper of Modigliani/Miller in 1958. There has been a continuous and serious hypothetical dialog about the ideal capital structure of an organization. One generally new piece of the related discussion is debt capacity and potential connection to the capital structure of an organization. Purpose: The purpose of the study was to examine the effect of debt capacity and financial performance of quoted firms in Nigeria. This study expected that debt capacity can be a way to characterize and deal with the capital structure of an organization. Methodology: The study formulated 3 hypotheses and the least square multiple regression was used for hypothesis testing empirical results based on 2014 to 2018 accounting and marketing data for 20 quoted firms in Nigeria lend some support to the pecking order and static tradeoff theories of optimal capital structure. Data were sourced from the Nigeria Stock Exchange, Security and Exchange Commission, and other relevant data sources. This study investigated, experimentally, if there might be a significant relationship between the debt capacity of organizations and their financial and market performance.   Findings: A firm’s debt capacity was found to have a significant impact on the firm’s accounting performance measure. Debt capacity measures have a positive and significant relationship with the market performance measure (Tobin’s Q). A fascinating finding is that all the influence estimates have a positive and exceptionally critical association with the market execution measure (Tobin’s Q), which could somewhat bolster Myers, (1977)’s contention that organizations with high transient obligation to add up to resources have a high development rate and superior. Unique contribution to theory, practice and policy: The consequences of this result further affirm some earlier discoveries by different researchers and prior analysts and the exploration work has had the option to discover answers to the examination addresses prior brought up in the basic part in the accompanying ways. It was therefore recommended that Companies can finance themselves with debt and equity capital. By increasing the amount of debt capital relative to its equity capital, a company can increase its return on equity. Also, in transition, the economic environment is more volatile and riskier than in developed markets. Therefore, a management scheme of capital structure that provides for flexibility in financing is preferable.  

Predicting Equity Returns Using Tobin's q and Price-Earnings Ratios

CFA Digest ◽  
2004 ◽  
Vol 34 (2) ◽  
pp. 48-49
Author(s):  
Edgar J. Sullivan
Keyword(s):  
Equity Returns ◽  
Tobin’S Q ◽  
Tobin's Q

Pengukuran Kinerja Perusahaan Menggunakan Pendekatan Objektif dan Subjektif

2020 ◽  
Author(s):  
Raymond Lim
Keyword(s):  
Firm Value ◽  
Likert Scale ◽  
Tobin’S Q ◽  
Tobin's Q ◽  
Value Growth

Mengukur kinerja perusahaan berdasarkan pendekatan objektif dan subjektif. Pengukuran secara objektif dilakukan dengan menggunakan ROA, Tobin's Q, TFP, dan firm value growth. Di sisi lain, pengukuran subjektif dilakukan dengan mengunakan likert scale.

Sign in / Sign up

Export Citation Format

Share Document