Intangible Capital and the Investment-q Relation
Event details
| Date | 24.04.2015 |
| Hour | 10:30 › 12:00 |
| Speaker | Luke TAYLOR (Wharton School) |
| Location | |
| Category | Conferences - Seminars |
Including intangible capital significantly changes how we evaluate theories of investment. We show that including intangible capital in measures of investment and Tobin’s q produces a stronger investment-q relation, especially in macroeconomic data and in firms that use more intangibles. These results lend support to the classic q theory of investment, and they call for the inclusion of intangible capital in proxies for firms’ investment opportunities. However, including intangible capital also makes the investment-cash flow relation almost an order of magnitude stronger, which supports newer investment theories. The classic q theory performs better in settings with more intangible capital.
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