"[Tobin's Q] is the ratio of the market valuation of capital assets to their replacement costs, for example, the prices of existing houses relative to the costs of building comparable new ones. For corporate businesses, the market valuations are made in the securities markets. It is common sense that the incentive to make new capital investments is high when the securities giving title to their future earnings can be sold for more than the investment cost, i.e., when q exceeds one."

--James Tobin

  


Equities and Tobin's Q —
Members-Only Area

Read the latest issue of Equities and Tobin's Q,
published on September 21, 2010


Download selected recent Tobin's Q resources:

Read selected investor commentaries mentioning Tobin's Q:

  • 12/2008 — Gross's bullish interpretation of Tobin's Q
  • 12/2008 — Napier's bearish interpretation of Tobin's Q
  • 06/1996 — Commentary by Marathon Asset Management

Review selected academic papers on Tobin's Q:

  • 2008 — Bris on governance following cross-border mergers
  • 2004 — Hennessy on Q, debt overhang and investment
  • 2003 — Harney on predicting equity returns using Q
  • 2003 — Villalonga on intangibles, Q and performance differences
  • 2003 — Davidson on governance and valuation in China
  • 2001 — Erickson on the information content of Q measures
  • 1999 — Himmelberg on link between ownership and performance
  • 1994 — Chung on approximating Q using simple accounting data
  • 1994 — Doukas on overinvestment, Q and foreign acquisitions
  • 1994 — Lang on Q, corporate diversification and firm performance
  • 1989 — Lang on managerial performance, Q and tender offers
  • 1988 — Montgomery on diversification, Ricardian rents and Q

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