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The elusive marginal q

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  • Tom Berglund

Abstract

This article discusses problems with proposed methods to estimate firm specific marginal q-ratios, where marginal q measures the value impact of new investment. The article concludes that suggested methods are likely to produce biased estimates since they fail to separate fluctuations in the value of assets in place, from the ex-post value increase specifically caused by the undertaken new investment. The usefulness of attempts to separate efficiency of new investments from efficiency of managing the firm's assets in place is questioned.

Suggested Citation

  • Tom Berglund, 2011. "The elusive marginal q," Applied Financial Economics, Taylor & Francis Journals, vol. 21(20), pages 1489-1493.
    • Handle: RePEc:taf:apfiec:v:21:y:2011:i:20:p:1489-1493
    DOI: 10.1080/09603107.2011.579059
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    Cited by:

    1. Jiří Schwarz & Martin Pospíšil, 2018. "Bankruptcy, Investment, and Financial Constraints: Evidence from the Czech Republic," Eastern European Economics, Taylor & Francis Journals, vol. 56(2), pages 99-121, March.
    2. Per-Olof Bjuggren, 2016. "Marginal q revisited," Applied Economics, Taylor & Francis Journals, vol. 48(1), pages 52-58, January.

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