Other Influences On Q
Tobin's q measures two variables - the current price of capital assets as measured by accountants or statisticians and the market value of equity and bonds - but there are other elements that may affect the value of q, namely:
- Market hype and speculation, reflecting, for example, analysts' views of the prospects for companies, or speculation such as bid rumors.
- The "intellectual capital" of corporations, that is, the unmeasured contribution of knowledge, goodwill, technology and other intangible assets that a company may have but aren't recorded by accountants. Some companies seek to develop ways to measure intangible assets such as intellectual capital. See balanced scorecard.
Tobin's q is said to be influenced by market hype and intangible assets so that we see swings in q around the value of 1.
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