IDEAS home Printed from https://ideas.repec.org/p/sek/iefpro/12513370.html
   My bibliography  Save this paper

Modelling the influence of Tobin's Q and cash flows on the capital investments of Russian firms

Author

Listed:
  • Stepan Bahteev

    (Ural Federal University)

  • Sophia Turkanova

    (Ural Federal University)

  • Andrey Pushkarev

    (Ural Federal University)

  • Oleg Mariev

    (Ural Federal University)

Abstract

The relationship between investment and cash flow has been extensively studied since the mid-20th century. The aim of our study is to assess the impact of Tobin's ratio and cash flows on the capital investments of Russian companies. For econometric estimation we data on 206 Russian public companies traded on the Moscow Exchange from 2011 to 2020. We apply quantile regression to obtain more detailed results. The results of our study confirm the significance of the Tobin ratio and cash flow on capital investments. We observe these effects in all quantiles however their magnitude varies. This research is valuable and can be utilized by companies to maximize efficiency of their capital expenditures.

Suggested Citation

  • Stepan Bahteev & Sophia Turkanova & Andrey Pushkarev & Oleg Mariev, 2021. "Modelling the influence of Tobin's Q and cash flows on the capital investments of Russian firms," Proceedings of Economics and Finance Conferences 12513370, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:12513370
    as

    Download full text from publisher

    File URL: https://iises.net/proceedings/15th-economics-finance-conference-prague/table-of-content/detail?cid=125&iid=001&rid=13370
    File Function: First version, 2021
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Russell Cooper & Joao Ejarque, 2000. "Exhuming Q: Market Power vs. Capital Market Imperfections," Econometric Society World Congress 2000 Contributed Papers 0528, Econometric Society.
    2. Oliner, Stephen & Rudebusch, Glenn & Sichel, Daniel, 1995. "New and Old Models of Business Investment: A Comparison of Forecasting Performance," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(3), pages 806-826, August.
    3. Lewellen, Jonathan & Lewellen, Katharina, 2016. "Investment and Cash Flow: New Evidence," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 51(4), pages 1135-1164, August.
    4. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    5. Schaller, Huntley, 1990. "A Re-examination of the Q Theory of Investment Using U.S. Firm Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(4), pages 309-325, Oct.-Dec..
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sahoo, Pravakar & Bishnoi, Ashwani, 2023. "Drivers of corporate investment in India: The role of firm-specific factors and macroeconomic policy," Economic Modelling, Elsevier, vol. 125(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    2. Kataria, Karin & Curtiss, Jarmila & Balmann, Alfons, 2012. "Drivers of Agricultural Physical Capital Development: Theoretical Framework and Hypotheses," Factor Markets Working Papers 122, Centre for European Policy Studies.
    3. Jacques Mairesse & Bronwyn H. Hall & Benoît Mulkay, 1999. "Firm-Level Investment in France and the United States: An Exploration of What We Have Learned in Twenty Years," Annals of Economics and Statistics, GENES, issue 55-56, pages 27-67.
    4. Caballero, Ricardo J., 1999. "Aggregate investment," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 12, pages 813-862, Elsevier.
    5. Joseph P. Byrne & E. Philip Davis, 2005. "Investment and Uncertainty in the G7," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(1), pages 1-32, April.
    6. Henriques, Irene & Sadorsky, Perry, 2011. "The effect of oil price volatility on strategic investment," Energy Economics, Elsevier, vol. 33(1), pages 79-87, January.
    7. Jean-Bernard Chatelain, 2003. "Structural modelling of financial constraints on investment: where do we stand?," Chapters, in: Paul Butzen & Catherine Fuss (ed.), Firms’ Investment and Finance Decisions, chapter 2, pages 40-58, Edward Elgar Publishing.
    8. Kilponen, Juha & Verona, Fabio, 2016. "Testing the Q theory of investment in the frequency domain," Research Discussion Papers 32/2016, Bank of Finland.
    9. Erica X. N. Li & Dmitry Livdan & Lu Zhang, 2009. "Anomalies," The Review of Financial Studies, Society for Financial Studies, vol. 22(11), pages 4301-4334, November.
    10. Janice C. Eberly & Andrew B. Abel, 2004. "Q Theory Without Adjustment Costs & Cash Flow Effects Without Financing Constraints," 2004 Meeting Papers 205, Society for Economic Dynamics.
    11. Emmanuel Adu‐Ameyaw & Albert Danso & Linda Hickson, 2022. "Growth opportunity and investment policy: The role of managerial incentives," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3634-3646, December.
    12. Klaus Mohn & Bård Misund, 2011. "Shifting sentiments in firm investment: an application to the oil industry," Applied Financial Economics, Taylor & Francis Journals, vol. 21(7), pages 469-479.
    13. Simon Price, 2004. "UK investment and the return to equity: Q redux," Money Macro and Finance (MMF) Research Group Conference 2004 87, Money Macro and Finance Research Group.
    14. Axel Börsch-Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi-Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    15. Samuel, Cherian, 1996. "Stock market and investment : the signaling role of the market," Policy Research Working Paper Series 1612, The World Bank.
    16. Farman Ali & Muhammad Ullah & Syed Tauseef Ali & Zhen Yang & Imran Ali, 2022. "Board Diversity and Corporate Investment Decisions: Evidence from China," SAGE Open, , vol. 12(2), pages 21582440221, June.
    17. Simon Price & Christoph Schleicher, 2006. "Returns to equity, investment and Q: evidence from the United Kingdom," Bank of England working papers 310, Bank of England.
    18. Emilio Colombo & Luca Stanca, 2003. "Investment Decisions and the Soft Budget Constraint: Evidence from Hungarian Manufacturing Firms," Working Papers 68, University of Milano-Bicocca, Department of Economics, revised Dec 2003.
    19. Cummins, Jason G. & Hassett, Kevin A. & Hubbard, R. Glenn, 1996. "Tax reforms and investment: A cross-country comparison," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 237-273, October.
    20. Joseph P. Ogden & Shanhong Wu, 2015. "Corporate Investment: Empirical Evidence for Alternative Propensities," Review of Economics & Finance, Better Advances Press, Canada, vol. 5, pages 1-21, November.

    More about this item

    Keywords

    Tobin?s Q; Russian firms; quantile regression; capital investments;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sek:iefpro:12513370. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klara Cermakova (email available below). General contact details of provider: https://iises.net/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.