Industry Specific Effects in Investment Performance and Valuation of Firms - Marginal q in a Stock Market Bubble

Per-Olof Bjuggren () and Daniel Wiberg

No 45, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: A necessary criterion for a performance measure in corporate governance is the degree to which it mirrors how well the management succeeds in maximizing firm value. Such a performance measure is marginal q which links changes in firm value to the investments decided by the management. Empirical studies of investment and performance based on marginal q have demonstrated the usefulness of this measure. Most research however, has mainly focused on long-term performance. This paper takes a short-term perspective and, based on the marginal q-theory, considers how market values change in the extreme stock price cycle of a stock market bubble. We find an anomaly in form of a new industry specific effect that, in addition to investment, explains changes in firm value.

Keywords: Marginal q; Investment; Stock bubbles; Different industries (search for similar items in EconPapers)
JEL-codes: G14 G31 G34 L21 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2005-12-28
New Economics Papers: this item is included in nep-bec, nep-fin, nep-fmk and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:cesisp:0045

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