Journal Article10.2307/3665623
A Simple Approximation of Tobin's q
Kee H. Chung,Stephen W. Pruitt +1 more
2.1K
TL;DR: This paper developed a simple formula for approximating Tobin's q. The formula requires only basic financial and accounting information, and results of a series of regressions comparing their approximate q values with those obtained via Lindenberg and Ross' (1981) more theoretically correct model indicate that at least 96.6% of the variability of Tobin' s q is explained by approximate q.
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Abstract: This paper develops a simple formula for approximating Tobin's q. The formula requires only basic financial and accounting information. Results of a series of regressions comparing our approximate q values with those obtained via Lindenberg and Ross' (1981) more theoretically correct model indicate that at least 96.6% of the variability of Tobin's q is explained by approximate q.
read more
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References
Managerial performance, Tobin's Q, and the gains from successful tender offers☆
TL;DR: For a sample of successful tendering offers, the authors found that the shareholders of high q bidders gain significantly more than the shareholders in low q tenderers, and that low q targets benefit more from takeovers than high q targets, while target q ratios decline significantly over the five years before the tender offer.
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