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Tobin’s q

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Abstract

Tobin’s q is the ratio of the market value of a firm to the replacement cost of its assets, a statistic that depends on the firm’s profitability and financial markets’ required rate of return. Although there are a variety of measurement issues, including the distinction between marginal and average q, Tobin’s q can be used to predict investment spending or to control for a firm’s current and future profitability in empirical studies of corporate structure and behaviour.

This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume

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    Gary Smith

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    Smith, G. (2008). Tobin’s q. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2829-1

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    • DOI: https://doi.org/10.1057/978-1-349-95121-5_2829-1

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    • Publisher Name: Palgrave Macmillan, London

    • Online ISBN: 978-1-349-95121-5

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