Quotation Gugler, Klaus, Mueller, Dennis, Yurtoglu, B. Burcin. 2003. Average q, Marginal q, Cash Flow and Investment. Southern Economic Journal 70 (3): 512-531.




Many studies of the determinants of investment use Tobin's q to control for the investment opportunities of a firm. Tobin's q roughly measures the average return on a firm's capital anticipated by the market. More relevant for investment decisions, however, is the marginal return on capital. In this paper we estimate investment and R&D equations using a measure of marginal q. We use marginal q to identify the existence of cash constraints and managerial discretion, and as a separate explanatory variable. For a sample of 560 U.S. firms observed over the 1977-1996 period we present evidence confirming the existence of both cash constraints in some companies and managerial discretion in others.


Press 'enter' for creating the tag

Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Southern Economic Journal
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new VW-D
Language English
Title Average q, Marginal q, Cash Flow and Investment
Volume 70
Number 3
Year 2003
Page from 512
Page to 531


Gugler, Klaus (Details)
Mueller, Dennis (Universit├Ąt Wien, Austria)
Yurtoglu, B. Burcin (Universit├Ąt Wien, Austria)
Research Institute for Regulatory Economics FI (Details)
Department of Economics (Gugler) (Details)
Google Scholar: Search