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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
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    File URL: https://iises.net/proceedings/15th-economics-finance-conference-prague/table-of-content/detail?cid=125&iid=001&rid=13370
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    References listed on IDEAS

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    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..
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    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).

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    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

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