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Original Articles

Tobin's q and overinvestment

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Pages 1-4 | Received 29 Aug 1996, Published online: 02 Nov 2006
 

Abstract

The objective of the research reported in this paper is to examine the claim that, for purposes of identifying overinvesting firms, an average q of less than unity is a valid proxy for a marginal q of less than unity. The empirical evidence provided supports, although does not prove, this claim. Hence, studies which utilize an average q of less than unity to identify overinvesting firms appear to operating on solid ground.

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