A Simple Approximation of Tobin's Q
Financial Management, Vol. 23, No. 3, 1994
5 Pages Posted: 13 Jan 2007
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.
Keywords: Tobin's q, Simple formula
JEL Classification: G1
Suggested Citation: Suggested Citation
Chung, Kee H. and Pruitt, Stephen W., A Simple Approximation of Tobin's Q. Financial Management, Vol. 23, No. 3, 1994, Available at SSRN: https://ssrn.com/abstract=957032
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