Report
The disappearance of “Tobin’s q” in the United States
“Tobin’s q” is the theory that companies increase their investment effort when the market value of corporate capital rises relative to its economic value. One interpretation is that companies are encouraged to accumulate more capital when markets’ valuation of their capital is high. S ince the subprime crisis, however, this relationship has no longer been visible in the United States, where “Tobin’s q” has disappeared. It still seems to work in the euro zone . The following explanations come to mind Financial constraints (overindebtedness) are curbing investment; Companies (their shareholders) do not believe that current market values of capital are sustainable; Corporate concentration and dominant positions have led to a weakening of investment. Indeed, more so in the United States than in the euro zone, companies have curbed their borrowing and equity valuations and the degree of corporate concentration are high.
Provider
Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
Other Reports from Natixis
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.